Over Here We Have a Lovely Refrigerator Box…

The undisputed king of the one-liners, Henny Youngman, used to say that his accountant assured him that he had enough in his retirement savings to last him the rest of his natural life. That was provided he died by 5 o’clock that afternoon.

With one daughter in college and the other about 365 days away from her freshman year, you can imagine thoughts of retiring to an abandoned refrigerator box and toasting squirrel for dinner isn’t all that far from my daily train of thought.

People like me — and there are plenty of them — are probably a good reason why CPA firms should seriously consider adding wealth management as a practice niche, although with my portfolio, you don’t necessarily need to amplify “management” with the noun “wealth.” A simple financial plan where I’m not getting sold complex products with high hidden costs on a commission basis will do nicely thank you.

Roughly 10 years ago, there was a great migration by CPA firms to enter the financial planning arena and though many were successful, an equal or greater number were not. It was a hard reality to learn that, surprise — you couldn’t divide your day between eight hours of tax or audit and two hours or so to financial planning. I’m not a CPA and even I can see that those numbers didn’t add up.

As a result, financial planning lost many CPA practitioners through attrition. A few waded back and most of them that had, did so under the radar.

Then something interesting happened.

About six years ago, my former publication decided to test the waters with a new survey — one that measured how much in assets under management were held by CPA firms. No other survey that had heretofore even attempted to gauge that metric.

The results were, to say the least, eye-opening.

There were roughly eight firms with more than $1 billion in AUM and several that either exceeded or approached the $5 billion mark.

Fast forward six years later, and the newest AUM survey has just been released. The 2012 ranking has 12 (!!!) CPA firms with a minimum of $1 billion in AUM and 17 more with at least $500 million.

You don’t have to be Milton Friedman to know that translates into a lot of client fees.

There are a number of ways to add financial planning as a client service, the specific methods of which I don’t have time to get into here, although I will do a deeper dive on barriers to entry in new client niches later this fall in one of our upcoming webinars, so stay tuned.

As for me, I was fortunate to secure a well-respected CPA financial planner in California some years ago who had the self-restraint not to ask (or laugh) if there were any missing zeros when I handed him my retirement accounts.

And he did promise that I would be able to retire in something larger than the above-mentioned refrigerator box.

I’m thinking perhaps one that previously housed a wall unit.