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Rick Telberg
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What Would Warren Buffet Do?

Some good advice for CPAs dealing with the stock market crash.

April 16, 2009
by Rick Telberg

This article was originally published in the AICPA CPA Insider.

Gripped by the uncertainty and fear that comes with a stock-market crash and deepening recession, clients and individuals are turning to CPAs for guidance and answers.

CPAs across the nation, in public and in private practice, are responding with calm, with competence and with integrity. But who advises the advisors? Who do CPAs turn to when they need answers and guidance?

One of the places where CPAs go for direction is Joel P. Bruckenstein, CFP. As a financial services technology consultant, Bruckenstein counsels advisors on practice management issues. Last week, he was a scheduled speaker at the AICPA Advanced Financial Planning Conference in San Diego.

We caught up with him to ask a few quick questions.

Question: Short-term, what should CPAs be doing in this economic environment to best help their PFP clients?

Bruckenstein: Reassuring them. Many would argue that we are experiencing the most difficult economic and investment environments in a generation. Clearly, this creates a great deal of client stress. We need to make sure that they are calm and that they do not make impulsive decisions based upon fear that they may regret later. The general public tends to fixate on the worst investment disasters during times like these, but there are many opportunities. Warren Buffet said he'd rather be a buyer than a seller at these levels, and so would I.

Question: Long-term, what's the outlook for CPA PFP services?

Bruckenstein: Generally speaking, left to their own devices, the general public tends to act irrationally during both boom and bust periods, so they need help. In addition, the great wave of baby boomers is approaching retirement, so they need help. Furthermore, the reputations of the large wire-houses (those that still exist, that is) has been tarnished during the last year.

The demand for unbiased financial advice should be very strong over the next 10 years, and there are not enough unbiased advice givers out there currently to meet demand. That leads me to believe that CPA firms offering fee-only PFP services should do very well.

Question: How can CPAs best seize those future opportunities?

Bruckenstein: By holding themselves out as unbiased advice providers. By aligning their interests with those of their clients. By building efficient practices so that they can provide excellent service on a cost effective basis.

Many CPA firms already have tax clients that can be brought on as wealth management or PFP clients, provided they can offer those clients the same level of excellence on the PFP side that they are currently offering on the tax side.

Question: What's the biggest misconception CPAs may have about adopting or expanding their involvement in PFP services?

Bruckenstein: Clearly, there are some similarities between running a CPA firm and a PFP firm, but there are also differences. I've come across some CPAs who let the tax-tail wag the wealth-management dog. That is a mistake. Tax savings are clearly part of the overall value proposition that you offer, but in order to be successful you have to take a comprehensive, holistic approach.

The other big problem that I see in CPA firms is a lack of processes, procedures and technologies that promote an efficient organization. There are some highly efficient PFP practices out there, but there are many that are not nearly as efficient as they should be. If you are not regularly reviewing your policies, procedures and your technologies, you are leaving opportunities on the table.

NOW IT'S YOUR TURN: What do you want to know about PFP services? Send me an e-mail and we’ll get it answered for you.

Copyright © 2009 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.