Some investors use their personal accountant as their primary financial advisor. Our research shows that.
According to Advisor Relationships and Changing Advice Requirements, 13 percent of Millionaires with a net worth between $1 million and $5 million use an accountant for some asset management, and 4 percent use their accountant as their primary financial advisor.
So who do accountants use for their investment needs? Do they use advisors at all? Do they turn to another accountant? Is the accountant-advisor relationship complicated by the fact that they both work managing money for clients, even if they have different assigned tasks?
All of those questions are answered in the new Professional Series study of doctors, lawyers and accountants. The series not only includes quantitative data from a survey of affluent investors who happen to be accountants, but also includes direct statements from accountants as part of the study’s qualitative information.
Spectrem has always segmented investors by occupation, but combined the physicians, attorneys and accountants into one segment of investors we called Professionals. This new series looks at each of those occupations separately to determine how advisors can best serve investors who have made a significant living in their professional roles as doctors, lawyers and accountants.
But the accountant report investigates the relationship between professionals who usually deal with budgeting and tax issues of clients and those who most often deal with investment decisions of clients. For many clients, these two service providers work in concert: almost all investments have tax implications, and budgeting is required to determine how much an investor can invest.
But accountants are also investors, and often become clients of financial advisors. According to our Professional Series report on accountants, 5 percent of accountants use another accountant as their primary advisor. Interestingly, 42 percent of accountants who have a primary advisor use a Full Service Broker, a much higher percentage than the general population of investors.
The attitude of accountants toward their financial advisor might best be summed up by this quote from an accountant surveyed for our study. It shows accountants consider advisors the way they anticipate their clients consider their accountant.
“Advisors are more generalists in investing than they are specialists in a particular asset class,’’ one accountant said. “As a CPA, I know principles of taxation and those of financial reporting, but I could not prepare a complicated corporate tax return on my own and expect to get the same results as an accountant who exclusively practices corporate taxation. I wouldn’t expect a financial advisor to be an expert in every derivative of an investment product.”
There are other attitudes expressed in the study. But the value of the report is the same as any other occupationally specific Spectrem study: advisors make better use of their time with a client and have a better prelateship-building opportunity when they go into meetings understanding what the investor is likely thinking about finances and investment.
Occupational segmentation is valuable because investors from the same occupation often think alike, and have reasons for their investment decisions which stem from occupational backgrounds.
The accountants report also includes information from accountants on their attitudes towards retirement, what is in their portfolios, how they use advisors, and their thoughts on advisor fees. When using advisors, accountants consider many of the same topics their own clients consider when hiring an accountant.