You may have exercised at a large fitness center that offers spa services, physical therapy or even golf lessons in addition to the usual array of cardio machines and free weights.
But that one-stop shopping doesn’t always apply to financial services.
When you visit your certified public accountant or estate attorney, he or she typically doesn’t offer investment advice. Your financial planner, while familiar with tax and estate planning concepts, is generally not licensed to give in-depth advice on those topics.
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Financial advisors typically refer clients to outside CPAs, attorneys or even insurance agents. That can work well if there is good communication among the various professionals.
However, some advisory firms take a different approach, offering tax preparation and even some legal services. Many also offer insurance sales. Advisors who offer more services under one roof say clients appreciate it.
“Having everything under one roof provides a worry-free and hassle-free experience for the client,” says Louis Barajas, partner at MGO Private Wealth in Newport Beach, California.
Rather than having different professionals working in silos, he adds, the client’s entire financial team can communicate more effectively.
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Bringing in Specialists
Barajas has offered wealth management, tax preparation and insurance since 1990. He works with ultrahigh-net-worth clients and doesn’t necessarily handle every transaction himself, preferring to call in others as needed.
He cites the example of using an estate planning specialist and insurance agency when funding an irrevocable life insurance trust. “The type of knowledge and skills needed for these types of clients is more nuanced and requires specialists in each of the three areas,” Barajas says.
Christopher Berry is founder and CEO of Castle Wealth in Brighton, Michigan. In addition to being a financial advisor, Berry is an attorney with a certification in elder law. His firm has a CPA on staff as well.
“Offering a wide variety of services means we have to master more areas of expertise and, therefore, have more balls in the air to juggle,” Berry says. “On the other hand, it makes our jobs a lot easier because we have every resource at our fingertips for legal, financial and tax planning.”
He says clients appreciate the range of services because they don’t have to check in with different professionals, each with their own businesses.
Berry believes more firms don’t introduce these capabilities because it’s difficult to do so, from both practice management and compliance perspectives.
“It can also limit referral sources from accounting firms if they believe that you are competition,” he says.
Benefits for Clients
Brad Campbell, executive vice president and chief investment officer at Integra Capital Advisors in Naples, Florida, holds a master’s degree in taxation, among other professional credentials.
He has long offered tax planning and preparation services as part of the client relationship, although not for a fee, and he limited the service to individual returns on IRS Form 1040.
He has a long-term plan of expanding the tax preparation service offering and adjusting the assets under management fees accordingly. “We are considering a sort of ‘unbundling’ of fees,” he explains.
For example, if a client has $5 million in assets under management with the firm and a portfolio management fee of 50 basis points, Campbell could add 10 basis points to cover tax services. Because the tax prep services are currently free, Campbell and Integra make it clear that they do not represent clients with an IRS issue.
Campbell hears from clients that they enjoy having the added benefit of tax services from an advisory firm. “Most of the time, they are coming to us for tax strategy ideas anyway, in addition to non-IRA account tax-loss harvesting.”
Recently, the firm has been consulting on charitable planning strategies and long-term capital gains strategies.
“Clients tell us: CPAs and other preparers are so busy during the tax season there isn’t as much time to sit down preemptively and talk strategy,” he says.
In Dayton, Ohio, Buckingham Advisors offers tax preparation services, along with insurance analysis and review.
Offering tax prep “adds complexities from a practice management standpoint, but it is easier to attract clients and communicate the value of working with our team,” says Nicole Strbich, Buckingham’s director of financial planning. “It is also easier to complete planning with clients and make sure that it is completed correctly without having to task clients with communication or implementation tasks.”
[SEE: 14 Things to Know Before Becoming a Financial Advisor.]
Downsides of a One-Stop Shop
Not all advisors want to bring more services under their roof, saying clients are better off using professional firms that specialize in just one or two areas.
Anderson Lafontant, senior advisor of advanced planning at Miracle Mile Advisors in Los Angeles, says her firm does not offer any tax preparation, legal or insurance services. Miracle Mile works closely with outside firms that provide these services when a client need arises.
“If everyone worked at the same firm, it wouldn’t be as transparent if one advisor wasn’t necessarily acting in the clients’ best interest,” she says.
Arvind Ven, founder and CEO at Capital V Group in Cupertino, California, offers advisory and insurance services. He refers tax preparation and planning clients to trusted CPAs.
He believes offering too many services under one roof may stretch an advisor too thin, which could impact client work. In particular, he considers comprehensive planning as a focus and says the referral system works well for his clients.
“Higher-net-worth and affluent clients need comprehensive financial planning and wealth management and not just money management,” he says.
By offering his own planning and investment management services, and referring to other professionals as needed, he says clients get more value “rather than having to put in place all these relationships by themselves in a piecemeal manner.”
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One-Stop Shop: Should Financial Advisors Offer a Wider Range of Services? originally appeared on usnews.com
