Academic journal article Journal of Accountancy

Capturing the Potential: How CPA Firms Are Building Successful Financial Services Practices

Academic journal article Journal of Accountancy

Capturing the Potential: How CPA Firms Are Building Successful Financial Services Practices

Article excerpt

Executive Summary

As they seek to grow their profitability and better meet the needs of their clients, many CPA firms today have expanded beyond their established accounting and tax practices into financial services.

To understand how these firms are operating their financial services practices, CEG Worldwide undertook a comprehensive study of 394 CPA firms nationwide to develop benchmarks against which accounting firms can evaluate and compare themselves. In particular, we sought to understand what makes the most successful CPA firms offering financial services stand out from all the rest.

Our single most important finding was clear: CPA firms that adroitly leverage outside providers for their financial services practice are, regardless of size (as measured by the number of CPAs in the firm), more successful than the firms with in-house financial services practices. They generated higher revenues in 2003 and expect to generate substantially greater revenues in 2004.

But this finding, as well as the others in the study, points to an even more important conclusion. Given the high growth expectations of firms of every type, the firms see significant opportunities in this market. This would apply both for firms already in the business to expand their financial services operations and for firms not yet in the business to start up financial services practices.

From our data, we were able to distill five keys to successfully capturing these opportunities:

1. Use outside providers to access financial services.

2. Offer a wide range of financial services and products.

3. Target high-net-worth clients.

4. Leverage existing clientele.

5. Take advantage of outside resources.

By incorporating these best practices, CPAs will be well positioned to run their financial services practices profitably and, just as important, to provide their clients with the quality financial services they need.


Recent years have seen substantial numbers of CPA firms add financial services to their traditional accounting and tax practices. In their ongoing efforts to meet their clients' needs while ensuring their own profitability, these firms have made financial products an integral part of their service offering. How are these firms faring? What is the scope of their product and service offering? Which business model for providing financial services is working best? What are the best practices among the most successful CPA firms providing financial services? And what are the opportunities for those CPA firms that do not currently offer financial services, but are contemplating expanding into the area?

In June and July 2004, CEG Worldwide conducted a comprehensive study to answer precisely these questions. We surveyed 394 CPA firms nationwide selected from the universe of all CPA firms in the financial services business (i.e., these CPA firms provide investments and/or insurance products for a fee and/or commission). The survey participant from each firm was the CPA in charge of the firm's financial services initiatives.

Because we wanted to include only those firms that have had time to fully assess how--and why--their financial services practices are working, we screened to include only those firms that have been in the financial services business for five years or longer.

Segmentation of the Study Group

We used a statistical process called cluster analysis to segment the surveyed accounting firms. The result was four segments based on two distinct features:

1. Size of the firm: those CPA firms with fewer than four accounting professionals and those with four or more accounting professionals. It's important to note that we based firm size on the number of accounting professionals and not the number of financial services professionals.

2. Business model for financial services: those firms whose financial services offerings are principally in house (via employees of the firm) and those whose financial services are principally offered through strategic alliances with outside providers (typically one or more joint ventures with persons who are not employees of the firm). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.