Editor’s Note: This is the first part of an interview on the ups, and downs, of setting up a wealth advisory arm at a CPA firm; the second part will feature in tomorrow’s Family Wealth Report.
Setting up a wealth advisory arm within a CPA firm can provide promising opportunities for both parties, but is not without its challenges, says Jack Thurman, president of BKD Wealth Advisors. What’s required, he says, is commitment.
Thurman set up the wealth advisory arm at BKD after 14 years as a consultant at Merrill Lynch, 10 of which were spent advising BKD on its retirement plan and cash flow, as well as its partners’ personal assets. Around 13 years ago the Midwestern firm asked him to join as president of a newly set up $14 million wealth business and, following discussions lasting around a year on the exact structure, he took on this role in February 2000.
It’s now a $2 billion practice, due to steady organic growth – a trajectory the firm is keen to continue on. What has helped it get there?
“It’s probably two dynamics – one is being linked to an accounting firm, and two is an implosion of the brokerage and banking models,” says Thurman. “When we win wealth management clients we’re not winning them from other wealth management firms like ours.”
His firm, an RIA, views clients in the brokerage model as “ripe for the picking”. But he acknowledges a big debt to the accounting arm – both in terms of winning clients and the way it has informed processes on the wealth side.
“We’ve tried to build as professional a staff and conflict free structure as a CPA has on the accounting and audit side,” he says.
“We take it to a further extreme and on the investments, our portfolio managers can’t even have an investment company… pay for their lunch. They can’t accept golf balls and free dinners from a mutual fund company.
“I mean you’re always going to have some little conflicts here and there, but you try and avoid any significant ones that might affect the structure of a client’s wealth management portfolio,” he adds.