Integrating your financial issues

Many executives find themselves turning to an array of professionals to help them with a myriad of financial issues, retaining an attorney for estate planning, an investment advisor and/or a Certified Public Accountant (CPA) for tax planning and an insurance planner. But more and more, executives are starting to ask themselves if they are really getting an integrated and holistic evaluation of their wealth management concerns and needs with such a fragmented approach. Perhaps an alternative is to look to a CPA firm that provides an integrated approach to all of these services in a comprehensive manner, says Tom Rein, a partner in charge of financial services with Whitley Penn LLP.

“We’re seeing a growing trend of executives seeking assistance from their CPA firm for estate planning, asset protection and other wealth management needs,” he says. “A CPA firm is able to provide a much higher level of consulting on all of these financial concerns, not just focusing on what kind of returns an executive has received on their investments.”

Smart Business spoke with Rein about the advantages of using a CPA firm to assist with wealth management strategies and some of the most popular strategies executives should be familiar with.

How can executives benefit from using a CPA firm for their wealth management needs?
Focusing on wealth management is unique for most accounting firms, but from a client’s standpoint, having discussions about overall wealth management, including asset and estate planning protection, investments and managing income taxes makes a lot of sense.

If someone has already been using a CPA to help with tax matters, then the CPA already has a good fundamental understanding of the client’s goals and financial ambitions. The disciplines within a CPA firm can be brought to bear, including tax, asset protection and estate planning. Because these services are integrated within the firm, the overall process is much more seamless than if the client were utilizing the services of several independent consultants, each assisting with just one piece of the overall wealth management strategy.

What are some key components of wealth management that executives should consider?
Executives should consider a variety of wealth management strategies including income and estate tax planning, asset protection, investment management and risk management, which simply means covering potential loss of valuable assets through the use of insurance.

How can executives best protect their assets?
There are a few basic vehicles that most executives are probably already aware of, such as using exempted assets like your personal residence, qualified retirement plans, annuities and life insurance to accumulate wealth. More complicated asset protection strategies include creating entities like corporations, limited partnerships or LLCs to hold assets. Ultra-wealthy individuals might consider using international and offshore trusts.

How can an executive find the right partner to assist with developing and implementing wealth management strategies?
While the size of the firm plays a role, executives should really consider the firm’s depth to ensure the firm has experience in each of these key wealth management areas. It’s very difficult for any individual to be an expert in everything, so a firm with several individuals with expertise in these areas is important.

Reputation in the community and past experience are also important considerations. Executives should ask for referrals from other colleagues and professionals with comparable financial concerns. I also highly recommend that executives conduct personal interviews with the firms they are considering hiring to find the right fit.

Lastly, it’s important to work with a firm that is independent in its investment advice, meaning they don’t have a financial incentive affiliated with a specific investment organization.

How do executives benefit from working with a CPA firm to develop and implement their wealth management strategies?
Traditionally a CPA firm will act as an independent advisor, not tied to a particular investment firm or mutual fund company that may offer a financial incentive for selling their products. Rather than receiving compensation from the company selling the investment products, CPA firms who do this kind of work are typically compensated by the client so we can offer the best, most appropriate products without any concern of how we’re being compensated or lack of independence. This increases the probability that the advisor is providing advice that is in the client’s best interests, rather than advice that is meant to provide more compensation to the advisor.

TOM REIN, CPA, PFS is a partner in charge of financial services with Whitley Penn LLP. Reach him at (817) 258-9160 or [email protected].