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CPAs increasingly also providing investment help

NORTH BAY – Financial planning and investment advisory services are become an increasingly profitable niche for CPAs, according to a report released last month by Moss Adams LLP and the American Institute for Certified Public Accountants. And local CPAs say they are seeing the trend play out in the North Bay.

Investment advisory revenue at CPA firms grew at an average of 35 percent from 2004 to 2006, according to the report, which was based on surveys conduced last year. That compares with only 18 percent average revenue growth in the broader financial advisory market, including both CPA and non-CPA practices. Accounting firms also projected an average 21 percent growth in their investment assets under management for 2007.

The survey results mesh with the experience of a number of North Bay CPAs who have been shifting their focus away from traditional tax and audit work into financial planning and investment management.

“More and more, as tax returns become commodities, what clients want from CPAs is advice,” said Angie Grainger, a CPA who recently joined the wealth management group at Santa Rosa-based Exchange Bank.

Other CPAs have continued their tax work while expanding into financial planning and investments and point to overlap between the two fields.

“You’re investing impacts your taxes, depending on how often you trade or when you trade,” said CPA Montgomery Taylor, owner of Montgomery Taylor & Company LLC in Santa Rosa.

Mr. Taylor started his career as a stockbroker before becoming an accountant. He helped launch the financial planning practice at the Santa Rosa CPA firm Pisenti & Brinker LLP and worked as a pension fund manager before launching his own CPA and investment advisory practice.

“I help all my tax clients with their investment issues, and I help my investment clients with their tax issues, so it does work well together,” Mr. Taylor said.

Whatever the model, several well-known CPAs and firms in the North Bay boast growing investment advisory practices.

Tim Delaney, a partner at Linkenheimer LLP in Santa Rosa, launched an investment affiliate – now known as JDH Wealth Management – for the firm in 2000.

“One of the things that I had found was that for my tax clients, there was no cohesive strategy as to how their money was being handled,” Mr. Delaney said of the decision to launch an investment practice.

JDH has grown to about $80 million in assets under management, and in 2006 Mr. Delaney stopped doing audit and tax work and hired a second investment adviser to keep up with demand for the service.

About four years ago, CPA Rick Clarke gave up his partnership in the Santa Rosa firm Zainer Rinehart Clarke after launching an investment affiliate, ZRC Financial Services, which has grown to $60 million to $70 million in assets under management.

“I always loved being an accountant and doing tax work and business valuation, but I always thought that investing” was a “dream job,” Mr. Clarke said.

According to the Moss Adams study, most of the growth in CPA firms’ financial advisory practices has occurred since 2000, and by 2006 the average revenue for each practice reached $462,000.

“It’s a natural extension of what CPAs have been providing in the past,” Leonard Wright, chairman of a financial planning committee for the California Society of CPAs, said of the growth trend.