Setting Up A Wealth Advisory Arm At A CPA Firm: Dedication Required

Harriet Davies

5 December 2012

Editor’s Note: This is the first part of an interview on the ups, and downs, of setting up a wealth advisory arm at a CPA firm; the second part will feature in tomorrow’s Family Wealth Report.

Setting up a wealth advisory arm within a CPA firm can provide promising opportunities for both parties, but is not without its challenges, says Jack Thurman, president of BKD Wealth Advisors. What’s required, he says, is commitment.

Thurman set up the wealth advisory arm at BKD after 14 years as a consultant at Merrill Lynch, 10 of which were spent advising BKD on its retirement plan and cash flow, as well as its partners’ personal assets. Around 13 years ago the Midwestern firm asked him to join as president of a newly set up $14 million wealth business and, following discussions lasting around a year on the exact structure, he took on this role in February 2000.

It’s now a $2 billion practice, due to steady organic growth – a trajectory the firm is keen to continue on. What has helped it get there?

“It’s probably two dynamics – one is being linked to an accounting firm, and two is an implosion of the brokerage and banking models,” says Thurman. “When we win wealth management clients we’re not winning them from other wealth management firms like ours.”

His firm, an RIA, views clients in the brokerage model as “ripe for the picking”. But he acknowledges a big debt to the accounting arm – both in terms of winning clients and the way it has informed processes on the wealth side.

“We’ve tried to build as professional a staff and conflict free structure as a CPA has on the accounting and audit side,” he says.

“We take it to a further extreme and on the investments, our portfolio managers can’t even have an investment company… pay for their lunch. They can’t accept golf balls and free dinners from a mutual fund company.

“I mean you’re always going to have some little conflicts here and there, but you try and avoid any significant ones that might affect the structure of a client’s wealth management portfolio,” he adds.

This kind of independence has gained significant traction within the wealth industry – with new RIA firms popping up regularly as others grow their teams with hires from Wall Street. Yet debate lingers about the message: is the industry differentiating itself well enough? Do consumers understand its message? In light of this, industry group Advizent is looking to more effectively market RIAs collectively.

At a firm level, Thurman says there’s more BKD could do on this, and it hired a marketing firm in the summer to help it develop its “messaging”. While its message has been subtle in the past, in needs to develop as the firm does.

“As we go out to the open market place we need to make that a stronger message, because we don’t always want to rely on the CPA side for developing new business. We’re right at $2 billion after 12 years and we feel we have just begun to build this practice, and if we’re going to develop it the way we want …love what they do and say ‘take care of my money, give me a plan and I’ll let you run it with my banker and my attorney’,” says Thurman.

He describes himself as “blue collar” and says that as he wasn’t raised with wealth, and as many BKD employees are “first-generation college educated, very driven,” the team works well with clients who have a similar ethos.

The second part of this interview – on talent management, targets and the “bumpy ride” of the market since BKD Wealth Advisors’ inception – will be published tomorrow.