What CPAs Are Asking
Does the CPA2 program have a successful track record?
For over 20 years, the CPA2 program has designed a proven co-source model that provides industry tools, systems, techniques and strategies for CPAs and wealth managers.
- What revenue potential can my firm expect by adding wealth management services?
The success of each CPA practice will vary. The revenue potential may be as high as 10-20% of adjusted gross accounting billings (excluding audit and attest billings).
The 10-20% benchmark is based upon actual results from past performance with three other wealth management services institutions/broker-dealers using the co-sourcing model. Keep in mind that future performance may differ from past performance. Past performance is no guarantee of future results.
- What is the revenue-sharing arrangement with a CPA2 wealth manager?
Our model is based upon a total payout of 94%, of which 24% goes to Nobile Hinchey Private Wealth Management for compliance and office expenses. The balance of 70% is split 35% to the CPA and 35% to the wealth manager.
- What licenses and credentials are required?
The primary product solution for wealth accumulation is a fee-based account program. The required licensing is a series 65 that includes a 3-hour exam of 130 questions.
- Should we set up a separate wealth management services entity?
We strongly suggest that the firm set up a separate entity(ies) for wealth management services to:
• Create a legal distinction between your CPA practice and the wealth management services business.
• Provide transparency to clients on services delivered and compensation.
• Better facilitate adherence to the ethical principles of independence and objectivity outlined in the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct.
• Help facilitate the transaction should you sell the wealth management services business.
- Multi-partner firms: Can unlicensed partners be compensated?
FINRA rules require that only licensed individuals can receive fees for assets under management.
- Multi-partner firms: Can a partner be affiliated with your broker-dealer and another partner be affiliated with another broker-dealer?
For clarity regarding advertising, supervisory and separation of business, all persons participating and offering wealth management services through the CPA2 program must be referral representatives with the same broker-dealer. For specifics, contact your broker-dealer.
- How long does it take to get licensed?
Generally, the process takes one to three months, depending on your availability.
How long until the new business is up and running?
During the one-to-three-month period while you prepare for exams, we will help set up the wealth management services office and business. We will help profile clients, assist with business structure, initiate on-site training and develop marketing. Upon successful completion of these activities, your business should be up and running immediately.
What are the capital requirements to start a wealth management services practice, and what can I expect for ongoing operating expenses?
Integrating wealth management services into your existing CPA firm with our co-sourcing model requires some capital outlay.
If applicable, the broker-dealer provides annual firm training for an additional annual charge of $0-$200 (please refer to the broker-dealer for the actual cost). Other costs, which vary, include licensing, exams, materials, and expenses related to establishing the appropriate business entity.
Ongoing operating expenses include marketing, administration, continuing education, seminars, client events, direct mail, technology, business cards and stationery. Nobile Wealth Management shares some of these expenses. The creation of materials to be used with any member of the public requires approval by the broker-dealer and RIA.
Is errors and omissions insurance necessary? How do I obtain it?
Under the Referral Representative contract, you are covered automatically — currently at a minimal cost.
Is this alliance exclusive?
If you choose to register with a broker-dealer and registered investment advisor, it is an exclusive relationship. You must be solely registered with these entities, most of which will not allow dual registration with any other broker-dealer. You may continue your referral network of other professionals. You may NOT refer business to any other broker-dealer or registered investment advisor — a violation of the securities industry’s policies and procedures and securities law. You may not be compensated for the sale of products you’ve referred to other broker-dealers or their representatives after becoming registered with our broker-dealer as a referral representative, even if these referrals occurred in the past.
What is the relationship between Nobile Hinchey Private Wealth Management and the CPA2 program?
Nobile Hinchey Private Wealth Management owns and manages the CPA2 program.
How is the CPA2 program different from the competition?
Our program allows CPAs to add wealth management services without materially disrupting their existing CPA practice. Nobile Hinchey Private Wealth Management is committed to delivering independent and objective wealth management services.
What is the period and sequence of events for initiation?
Month 1: Letter of intent and delivery of licensing kit.
Month 2: Schedule exams, study and sit for exams.
Month 3: Deliver applicable Referral Representative contract; market planning, client profile and office setup.
Month 4: Begin Financial Services Day, marketing activities, client appointments, client offerings, sales and services.
What is my state’s position on CPAs accepting commissions?
Contact your state board of accountancy for rules, regulations, and interpretations of your state. Visit the AICPA website for information (www.aicpa.org/states/uaa/commfees.htm).
What is the AICPA’s position on CPAs accepting commissions?
Rule 503 (commissions and referral fees) of the AICPA Professional Standards states that CPAs can accept commissions if they disclose them to the client. CPAs cannot accept commissions for products purchased by clients for whom they performed the audit or attest functions.
How will my clients react?
Chances are clients already seek wealth management advice. By bringing these services within your control, you can guide clients through recommendations and decision-making and then assist with implementing long-term strategies.
What are the legal and compliance issues?
As the accounting profession has rules governing ethical business conduct, so do wealth management programs. Our services allow wealth managers to offer solutions tailored to individual client needs. By following the policies set forth by our corporate compliance office and providing services in the client’s best interest, compliance risk can be managed effectively. Our system of documentation and disclosure ensures clients understand the wealth management services offered and your compensation and that this compensation is distinct from your accounting practice.
Our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and understand your tolerance for risk. Long-term relationships that encourage open and honest communication have been the cornerstone of my foundation of success.
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