How Advisors Can Collaborate With CPAs

Financial advisors can build their practice by networking with other financial professionals such as tax attorneys, life insurance practitioners, divorce mediators and others. At the top of that list of beneficial partnerships are certified public accountants.

Relationships with CPAs and other “centers of influence,” or COIs, are invaluable, not only as a source for new clients, but also as a resource for key strategies to retain assets. The partnership between a financial advisor and CPA is a natural fit because both roles involve an understanding of the flow of money, particularly in the retention of assets against excess taxation.

The U.S. tax code is more than 2,600 pages of statutory code, ballooning to as many as 70,000 pages as published by the CCH Standard Federal Tax Reporter, which also includes regulations and revenue rulings and annotated case law. Within this voluminous collection of pages is guidance that, in the hands of a skilled tax professional, can help a client avoid paying more tax than is required to meet their obligations. The client can benefit from this savings and use it to meet future goals such as retirement.

[SUBSCRIBE: Get the weekly U.S. News newsletter for financial advisors. ]

Adding Value With CPA Relationships

A client can hire a CPA without involving a financial advisor and vice versa. But your clients will truly benefit from having more than one set of specialized eyes on their financial situation and major life decisions. Tax law is constantly changing, and the CPA can often bring new concerns to the attention of both the financial advisor and client.

Financial advisors cannot offer specific tax advice, but even general considerations may have critical nuances based upon different states and even local municipalities.

For example, business owners often contemplate moving their companies based upon lower state tax laws in the new location. Additionally, due to the pandemic, many are agreeing to remote working arrangements for their employees, relieving management of the overhead expenses of a physical office. A CPA can help the parties navigate the various income, sales and payroll taxes that would be associated with the move, both for the owner and each remote employee. A tax specialist can knowledgeably discuss the unique tax considerations when a company chooses to relocate to another state where it does not have a physical address.

A financial planner adds significant value to their client relationships by bringing in a qualified, vetted CPA to the table when their client is considering major changes to their financial picture. Clients can easily justify the advisor’s value when they avoid costly mistakes because of the advisor’s professionalism. They may also see a clearer path to taking key steps that they may have previously delayed. For example, a business owner may integrate a fractional CFO into the leadership team as the company grows.

Advisors also recognize that these experiences affirm the value of having a solid team of COIs. There are several steps that an advisor can take to implement a structured plan in this endeavor.

[Read: How to Become a Financial Advisor at 40 as a Second Career.]

Develop a Brand Strategy

Advisors need to narrow their focus to the areas where they have the greatest strengths. Advisors may offer a broad array of services, but showcasing their best service allows them to create a market differentiator. Marketing materials may be created that emphasize this aspect of the practice, while simultaneously showing the broader array of available services.

Conduct a Client Survey

An advisor can create a “buyer persona” that reflects the firm’s ideal client profile. Next, the advisor matches existing clients to this profile and asks a sampling of them about their individual CPA experiences. The goals are to learn whether there are overlapping synergies with a specific CPA firm, creating a warm approach, and determine which clients may not already have a CPA relationship, giving an immediate opportunity to create value for them.

Make a Warm Introduction

CPAs are routinely bombarded by financial professionals who want to refer business to them. An astute advisor reverses the overture, so the CPAs could see offering value to them. Matching local CPAs to the buyer persona, an advisor can cull available professionals, so they match the clients who may not have a prior relationship with a CPA. Tax professionals welcome a meeting when they understand that a successful outcome could result in immediate business.

Enable Thought Leadership

Savvy advisors understand that lifting a CPA’s professional profile is an excellent way to gain positive reciprocity and referrals. As new COI relationships are created, the advisor can invite CPAs to distinguish themselves in the market through speaking opportunities. These engagements, based upon the CPA’s unique strengths and in tandem with the firm’s branding strategy, can create positive synergies benefiting both parties and increasing client education.

[Read: Financial Advisors Eye Biden’s Plan for Estate Taxes in 2021.]

Enable Professional Growth

A resourceful advisor can become a national provider for continuing professional education, or CPE, credits. The advisor may become a regular speaker for local CPA groups, establishing himself as a noted professional. Additionally, by hosting in-house lunches, the tax professionals could see the firm in action in a more conversation-friendly environment. Regular in-person interactions keep an advisor front-of-mind with the CPAs, creating an incentive for giving active referrals.

Be a Professional

An advisor who wants CPA referrals must make it a point to be thorough in any interaction involving their COIs and be proactive in their needs. For example, the advisor can ensure that their clients have all the forms necessary for the CPA to complete tax returns on a timely basis, especially when the cost basis of an investment is needed. Additionally, CPAs typically work on an hourly basis. A conscientious advisor counsels clients to have their CPA contact them directly for any financial questions that involve a level of expertise. Not only does the CPA save valuable time that they can use to bring in additional clients, but the client relationship is enhanced by the savings in professional fees.

The successful collaboration between a financial advisor and CPA shows that nurturing COI relationships does more than produce mutually beneficial results. It also demonstrates to clients your professionalism, value and trustworthiness.

More from U.S. News

6 Pros and Cons of Choosing a Fee-Only Financial Advisor

14 Things to Know Before Becoming a Financial Advisor

8 Ways Financial Advisors Connect With Millennial Investors

How Advisors Can Collaborate With CPAs originally appeared on

Related Categories:

Latest News

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up