Discussion:I'm Curious how many offer BOTH tax prep and financial advisor services

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Discussion Forum Index --> Business Growth Community --> I'm Curious how many offer BOTH tax prep and financial advisor services

Umk395 (talk|edits) said:

31 December 2009
Maybe we could take a poll. I'm interested in knowing a few things:

1. Do you offer tax preparation services along with financial planning and investment advisory services (Series 7, et al)? This includes managing client's investments, offering securities advice, etc.

2. Since I just got licensed as a securities advisor, I'm curious what others earn in fees on a net basis on the assets managed (e.g., wrap fees). I am an investment advisor representative and receive approx 7/10 of a percent on the assets under management. Is that typical for more investment advisor representatives?

3. The obvious reason for the investment advisory firm in asking me to get licensed is pretty straight forward -- they want to tap into my reputation, trust and confidence that my hundreds of clients have in me. They want a piece of the action. Turns out that the investment firm that I rep for handles all the paperwork, designs the portfolios, etc -- so I'm pretty much just leveraging my client relationship to steer business to them in exchange for 70 bps. It also allows me to be their single source financial and tax advisor -- which appears to be a huge selling point based on the initial reaction of my clients with whom I have solicited.

I would be interested in knowing how this has worked out for others and which firms they rep for (e.g., LPL, Ameriprise, etc.) and how that has worked out for them. I'm also doing this to diversify my revenue sources (tax prep, consulting, financial advising fees, etc.) I have E&O for the financial advising services in addition to malpractice insurance for my separate tax practice.

Just curious if anyone has any advice, comments etc. Thanks for any feedback.

Happy New Year!

Kevinh5 (talk|edits) said:

31 December 2009
it's the entire business model for H.D. Vest and I think also 1st Global for the tax pro to be the financial pro

Kevinh5 (talk|edits) said:

31 December 2009
I don't think you get as good a payout at Ameriprise as you would at others that I've looked at - I've been with Vest for 16 years.

70bps is kind of low if you are doing quarterly meetings with your clients

Umk395 (talk|edits) said:

31 December 2009
I'm not sure that I would meet that frequently with clients -- maybe once a year. But I expect to call them once a quarter or maybe every 4 months to provide a status update.

The firm I work for charges a 1.75% wrap fee on most accounts (of course, larger accounts are a little less -- say around 1.25%) -- so I am getting approx 70 bps of the 1.75% -- does seem a bit low. I think my payout goes to 90 bps when I have more than $2.5MM under management.

Does that seem like a fair fee?

Fletch (talk|edits) said:

31 December 2009
if done right, will be the best decision you ever made for both you and, more importantly, your clients -- win/win. By a country mile. Been with HD Vest soon after it became legal in Texas (1987)

Southparkcpa (talk|edits) said:

1 January 2010
I offer both. My PERSONAL view is that 1.75 is VERY expensive.

I charge a wrap fee of 1.1 percent and my cut is around 75 percent of that.

I use only NO LOAD funds with expenses of around 30 to 40 bps so my total client expense is usually below 1.75.

That is just my model, most charge more than me I recognize that.

Death&Taxes (talk|edits) said:

2 January 2010
I put my thoughts down on paper seven years ago:


CrowJD (talk|edits) said:

3 January 2010
I think the test should be whether you are any good at it. For instance, almost every "truism" about investing has been blown out of the water once the last 10 years get worked into the data.

So, if you are "advising" by following some formula, it may not be a win-win situation for the client. It could be a disaster for the client.

"This past year’s rally wasn’t enough to restore money lost in two bear markets after the Internet bubble collapsed in 2000 and more than $1.7 trillion in global bank losses sent the index to a 38 percent decline in 2008. The S&P 500 posted an average decrease of 0.9 percent a year since 1999 including dividends, the first negative return for a decade since data began in 1927, according to S&P analyst Howard Silverblatt."

“This dispelled two myths,” said Robert Arnott, founder of Research Affiliates LLC, which oversees $47 billion in Newport Beach, California. “The notion that investment gains are easy, and the notion that stocks will win for the patient investor, no matter what we pay.” http://www.bloomberg.com/apps/news?pid=20601087&sid=azRby9JhxPH0&pos=6

Fletch (talk|edits) said:

3 January 2010
Absolutely agree with your first sentence. We certainly know that individual investors are truly horrible, as are the so-called consumer advocates and financial comic books ("Money" et al)

But I'm afraid the thread has been gradually hijacked a bit. Also IMO specific fees, specific strategies, etc are way too broad for this forum.

Back to the poll anyone?

CrowJD (talk|edits) said:

3 January 2010
It's enough to have to worry about stock funds.

But, the biggest danger is from a bond fund. I would avoid a short term bond fund like the plague now, but, then again, everyone is saying that. I'm afraid of most bonds now, period.

Overall though, the key is to NEVER put your money into any bond fund, you can get whacked good on an interest rate move because the fund manager may be required to stay short (or long) i.e. not convert to cash early enough.

It's just too easy to trade them yourself, if you are good at judging the direction of interest rates (and it's not rocket science). The problem is that in a 401(k), I think you are forced to use a fund manager: i.e. mutal fund for bonds. The 401(k) is just a big rip off of the public. Just horrible investment management in the funds for the most part.

Self directed IRA though, set up a brokerage account, and trade bonds, buy your own stocks; and with so many liars and fast buck artists on Wall Street today, don't be afraid to sit in a Money Market Fund, or short term CD which you can buy in your brokerage account.

Ksnoopytax (talk|edits) said:

3 January 2010
I've thought about offering financial services to my clients. Here and there I have clients who need a SEP or IRA or want to start a company 401k plan and end up passing them off to a financial advisor we work with. Many times the client will go out and find their own financial advisor when I feel that if I were to offer them the service, they would do it since they already trust me.

I am rather clueless about the process though and I don't see much on this website about it. Maybe someone could refer me to a site that could answer these questions.

What do you do you need to take in order to be able to sell securities? Does what "series" you get determine what you can sell? Does designations such as a CFP require you to have certain licenses and do you need to be sponsored by a broker in order to sit for any of these tests?

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