I’m not ignoring the other stuff. I just can’t type that much on an iPhone.
ok fair enough.
However, think about what the CPA boss is actually paying you for. If its strictly for doing taxes, and related work, that’s a big difference then “tax planning” - which I would consider this is the type of work you are doing at your own investment firm. If your doing the tax planning and associated work (i.e. integrating the investment, tax, insurance with cash flow/retirement and estate planning) - ya you should be getting paid on this not your CPA boss. (Again, we don’t know if the CPA boss wants to be doing this type of planning work or not…)
So I guess it is good to have the asset management division on the side of the tax preparation business, for when Mnuchin releases the postcard sized tax with simplified fields.
https://www.wsj.com/articles/smaller-irs-1040-tax-form-will-be-postcard-size-mnuchin-says-1529527839
One of the two CPA bosses has zero interest whatsoever. But they both understand that it can be a source of nonseasonal revenue.
Of course, anything that is actual portfolio management (asset allocation, asset location, security selection) goes thru the BD, period. Anything that is tax prep goes thru the CPA firm, period.
Together, I discussed it with the CPA bosses, and we decided that we can perform financial planning engagements under the accountants exclusion without needing to register or share the revenue with the BD.
The main reason that we are doing it this way is because my time really belongs to the CPA firm. That is my primary job, and where my focus needs to be. Within the next few years, I’ll be the owner of the CPA firm, and then I’ll be getting paid on it, and can turn it into whatever I want. Plus, I’m getting paid indirectly for it now, too
I don’t think that hourly rates are inherently evil, whereas you seem to loathe them. To me, that’s a very fair way to charge for advanced planning work. That’s how lawyers charge, accountants charge, and plumbers charge. And I like to think that the advice we give is worth more than what you get from the average retail FA
right after I typed this, I realize how a-holish it sounded. That wasn’t meant to be a dig at you, and I apologize if it came across that way.
The message I was trying to convey is this: Edward Jones will set you up a basic asset allocation and put your money in the house model. They will roll over your IRA and if you’re a business owner, possibly set up a SEP or 401k. They will do all this for a 1% fee. (A little more if you have less, and a little less if you have more)
We have far greater breadth and depth of services that we can offer, because of our greater understanding of the Internal Revenue Code, community property law, estate planning, retirement planning (who do you think the FA’s ask about the mechanics of converting 401k’s into Roth’s and why you shouldn’t roll an ERISA plan into a non-ERISA plan?), and entity structuring. If we provide more services and better advice than Edward Jones, why shouldn’t we get paid more?
Plus, most of the “advice” you get from Edward Jones isn’t really advice—it’s a facade to sell more product. The vast majority of our planning doesn’t manifest itself in additional sales. It provides value to the client, and it’s completely transparent. Why should we give that away for free? (Relative to Edward Jones’s advice, that is.). Sometimes you get what you pay for.
i partially agree with this. I think that the vast majority of advisors don’t add value. But I definitely want to charge an AUM fee, because if Edward Jones is worth it, I’m sure as sht worth it.
And yes, I place a high value on simplicity. Many professionals (accountants, lawyers, and investment advisors) tend to overcomplicate things with the intent of running up their billings. While I’m not adverse to billing my clients for value added, I think that any additional complexity should benefit them, not me.
advisors add value, cuz tbh, the typical middle class is typically both retarded and a pussy.
the simple S&P 500 and bond allocation is enough to get shit done, target date it and you are set.
without edwards jone, these idiots would put their money on a cd that yields 1%, vs a target date fund that’d prolly yield 7% net of fees.
i used to enjoy greenmans posts much more when he was working for someone else. much more drama back then
ok I see where your going here. I would think the primary focus should be on transitioning the tax practice from the current owners to you (which can be a lot of work in itself). I’m not saying charging hourly rates is evil but I think right now your kind of in a difficult position because you want to start gathering AUM for the investment practice, but the planning rev may end up going to the Accounting practice. I suppose you could position it to the accounting client that since your doing the tax and planning, it makes sense for you to be managing the investment assets - so you start to get paid on this.
No I didn’t think it was a dig at all, and I agree, if your providing high quality planning services, you want to be able to charge a premium fee for that service. I don’t give advice away for free. However, you need to be able to explain to the client/prospect what that service model is, how it benefits them (and quantify it as much as possible (i.e. fee savings, tax savings etc) along with your approach to managing investments.
[quote=“Greenman72”]
Yes the payout to you should increase as your AUM goes up.
yep u can always negotiate. if you are killing it for them, they will always pay up and give you higher share, cuz as an employee, you are always being taken advantage of.
My firm is about $450mm AUM and we don’t accept any new assets unless the client is paying a retainer fee for a financial plan.
^ So are you charging a fee for the financial planning, in addition to a fee for managing the investments?
Mike,
you seem to be a pretty sharp guy in the advisor world. Is there an advisory equivalent of AF where a lot of FAs congregate and bounce ideas off of each other?
@Chad - I still think advisorforum.com is a moneymaker, like AF and cpaforum.com. Just my .02.
^ Thanks. I just talk to a lot of older advisors who have been in the business a long time (I’m 39), and just ask question after question. I actually started out in the business as an associate under two really good advisors who helped me a lot, and then they made some changes to their business model and I was able to take over some of the clientele and I went out on my own. I still keep in touch with them and I consider them to be mentors. They even refer prospects to me if they aren’t a good fit for their firm.
We also have a big branch that does a lot of events for advisors and some social stuff too. (Were going to NYC next week for a conference) - so I get to talk to some other younger advisors in our network as well.
Not aware of any advisory equivalent of AF but I’m sure there are a few others on here (me, you, MLA, others…?)