Changing Your Mindset is Key to Developing Effective Partnerships with CPAs

By Matthew Paine

When Dallas-based wealth manager 1st Global asked individual investors to list the most important factors they used to choose a financial advisor to help them manage their money, in a 2018 research study, two factors were cited more often than any others: tax knowledge and good communication skills.

While the ability to communicate with clients is a natural skill for most successful advisors, detailed knowledge about taxes is one many advisors have to refer out, frequently to Certified Public Accountants (CPAs) who specialize in strategies for protecting a client’s money from unnecessary taxes. It’s a standard strategy where advisors refer clients to outside resources and hope the resources make referrals back to them.

But, as they say, hope is not a strategy.

Instead of randomly seeking out CPAs in your community and letting them provide critical tax strategy, I believe you should think of it as a way to grow your practice and develop more authentic relationships with clients and the outside resources who can help them. 

One way to begin building those relationships is to think of how you make referrals to outside professionals like CPA. You are likely to only send them to people you have developed a relationship of trust with. You need to know that anyone you send your client to is diligent in responding to their needs and is always acting in the best interest of the client. 

For investors, tax issues are as critical to successful investing as they are complicated. The IRS tax regulations frequently change and one new rule can mean thousands for even small investors. Whether your client brings up tax questions or you introduce a conversation that involves tax implications, it makes sense to suggest getting on a call together jointly with your client’s CPA or a CPA you suggest. 

If you want to form a relationship with a CPA, you must be proactive and take the lead. But do it with a “Service First” mindset focused on providing the best service possible to your mutual client. Approach them with a specific question and purpose. Then be ready with investment options or recommendations that will help your client achieve their objectives. This type of concrete outreach to a CPA has a specific purpose that is easier for them to respond to than the more abstract idea of “send me client referrals.” More importantly, it helps your mutual client.

As you begin this approach, don’t worry about whether or not this will generate new business for you. That’s not the measurement. Focus on providing the best service and results you can for your client. Ideally, over time, you will build trust with one of more of the CPAs you collaborate with on behalf of your clients. And what happens when you demonstrate consistency, trust and competency? The results will come more organically and likely be longer lasting.

It’s important to note, working as a team for your client takes them out of the position of having to be the liaison between you and their CPA. In that dynamic, important information can be missed and they end up doing some of the work; it’s not truly the complete concierge wealth management service you want to be delivering to them.

Here are six ways you can get the most out of these initial CPA-Client-Advisor meetings for you and your client: 

    While non-CPA advisors should avoid providing specific tax advice, it behooves you to be aware of when an action you take on behalf of your client is a taxable event. Any time you make recommendations, consider the tax implications for your clients. When they ask for more tax-related details that go beyond your area of expertise, this presents an opportunity to suggest a group meeting with their CPA. 
    When laying out a retirement plan or changes to a current retirement plan for your client, explain how various asset vehicles can generate taxable events. Let your client know you’d like to make sure you are using the most optimal timing to preserve their retirement nest egg. Suggest a group meeting with their CPA. With your client’s prior permission, broach discussions with their CPA regarding the client’s retirement plans and the timing and tax implications from the various asset vehicles you may be recommending.
    If you are going the extra mile to build your relationship with your client, pay attention to when they mention a potential major life event. Are you keeping track of their children’s ages and addressing college planning? How about if they are considering taking a new job or retiring? Have they mentioned a separation or divorce? Have they shared with you information about aging parents? Assure them that you are there to ease them through these transitions and, to the extent that their major life event could require financial decisions that have tax implications, be sure to address that head on. Once again, pull in their CPA as warranted while always making sure to ask permission prior to sharing any sensitive information with other professionals.
    A beneficiary review can be another service to your client that can open the door to conversations with their CPA. Take stock of all assets your client holds that can include beneficiaries. In addition to making sure that the client has complete and accurate information for their beneficiaries, this is a good time to ask about any additional assets your client may be intending to bequeath to specific beneficiaries. It’s a good way to find out how knowledgeable they are about the various tax implications for their heirs when they inherit the assets. If this is unfamiliar territory to them, suggest getting together with their CPA to have a comprehensive discussion on what the various tax implications are with a desired outcome This is an opportunity to invite their estate attorney into a conversation as well. If they don’t have one, you can reach out to one you know. At the same time, if your client is open to it, have a meeting with one or more of their heirs, so they know who you are, how you are working for the client and to make sure they have your contact information. 
    You’re already providing year-end tax information to your client. However, watching for all of these forms in the mail/email or logging into a website can be a stress point for some people. A year-end summary solves that problem. They can be as simple or detailed as you deem appropriate. At the minimum, they should provide the relevant details of your client’s account activity, and what forms they can expect to receive they will need for tax preparation. In the spirit of collaboration, with the client’s permission, you could forward a summary of this information to their CPA in a convenient checklist. Imagine the goodwill you can develop in making the CPA’s job easier during their busiest time of year.
    This is a meeting you could suggest prior to establishing a relationship with your client’s CPA but more likely, this is a service you could strive to provide once your collaboration with the CPA is more established. The objective of this meeting is to conduct a more comprehensive review of your client’s financial picture based on their previous year’s tax returns, current income, and investment activity. 

Holding this type of meeting does a few things:

  • It’s a relationship-building touchpoint with your client – and their CPA – that allows you to revisit conversations about current situations, upcoming events such as children enrolling in college, thoughts about buying or selling a home or even a career change.
  • With an understanding of upcoming events, you can discuss their current investments as well as give them new recommendations on strategies that can improve their personal finances and reduce their taxes. With the CPA in the meeting, it can be a seamless conversation for the client that truly provides him or her a concierge level of service.
  • Ideally, this will also provide ongoing education for your client so he or she understands the tax implications of decisions they make, such as with Roth conversions. Oftentimes, CPAs end up in the position of having to explain this to a client who is surprised by the implications. This is another pain point of CPAs you can alleviate while making the effort to close this loop between the advisor-client-CPA relationship. 

In keeping with the “Service First” mindset, these creative, yet practical, ways to develop true interactive and effective partnerships with CPAs will directly benefit your clients. While we stressed the importance of keeping your client’s needs at the forefront of this venture, there is great potential that these partnerships will in turn benefit your practice. 

What better way to show CPAs how you work with your clients, the level of care and service you provide, your respect for the other financial professionals working on behalf of your clients, as well as the expertise you bring, than to interactively work with them and their current clients? By beginning with your mutual clients and working to optimize the service you provide them and collaborating with their current CPA, it gives their CPA a real inside look at how you work with them. Not only can this benefit your client, it can open the door to referrals to you by CPAs you’ve established a true respect and relationship with. 

This will take time. It won’t happen overnight. Not all clients will have a CPA, not all CPAs may be amenable to work with you. But it’s like anything else in sales; it requires patience, a spirit of teamwork and persistence. The more you incorporate these strategies into your practice, the more it will become a natural part of your process that can work in favor of both your clients and your practice.

Matthew Paine is Senior Vice President at GWG Holdings.


FOR REGISTERED REPRESENTATIVES AND FINANCIAL ADVISOR USE ONLY. For educational purposes only. GWG does not provide tax advice and only someone licensed and qualified to practice should deliver tax advice. This article is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy securities of GWG or any of its affiliates. An offer of securities will only be made with the applicable offering documents which have been filed and registered with the appropriate state and federal agencies. The material presented reflects information known to the author at time written and is subject to change without notice. Registered Representatives of GWG are licensed through Emerson Equity, L.L.C. member FINRA/SIPC. GWG and Emerson Equity, L.L.C. are not affiliated entities.