Immediately after Roth IRAs were introduced in the late 1990s, CPA John Azodi of Kansas City, Mo., told 100 of his tax planning clients that they should open one. Yet when he saw them at tax time a year later, just two of them had taken his advice.
"I thought, 'I wonder if I could have done this myself how many people would have opened one?'" he recalls. The question prompted Azodi to get his own licenses to sell securities and to begin offering his services as a planner.
EXPANDED EXPERTISE
Fifteen years later, Azodi runs a program through Panora, Iowa-based annuity provider Brokers International that teaches CPAs like himself to become planners. Thus far, Brokers says 600 CPAs have taken one of his classes or seminars. Azodi says there's a need for the two professions to share.
"I personally believe that every CPA either needs to provide these [investment] services or be much more in-depth in understanding them," he says. "Often, there is even an adversarial relationship between CPAs and investment professionals. These groups really should work with each other because really they don't understand each other. When the two don't communicate, the client suffers.''
JUMP IN PAY
When CPAs don't work as planners, they can suffer too. Salary research firm PayScale says CPAs with 20 years of experience or more make between $48,633 and $148,677. That compares with $44,042 to $255,321 for financial planners with the same number of years in the trenches, according to the firm.
Many CPAs don't become planners because of their personalities, Azodi says. "They are not very proactive people,'' he says. In fact, multiple studies have found that accountants tend to be passive and introverted. Key skills for planners include the ability to assert one's self, to express opinions and to charge for differentiated services, he says.
He estimates that just 25 of the CPAs whom he has taught have obtained securities licenses themselves or are in the process of doing so. Most are getting licenses to sell life insurance, long-term-are policies and annuities. About half are obtaining licenses to sell mutual funds and to manage their clients' money. "They are the exceptions,'' Azodi says. "For those that actually see the opportunity for themselves and their clients, they become very good at it."
He hopes they can provide more enlightened tax advice.
"A lot of clients will ask their CPAs about something they got from their financial planner," Azodi says, "and many times the CPAs will knock it down because they don't [understand] it. It's like attorneys who like to kill deals rather than make them. I think the same thing often happens with CPAs who kill a deal in order to make their clients safe rather than [approve an investment] to make them better."
About five years after obtaining his securities licenses, Azodi says he dropped the accounting side of his practice for new clients.
For every dollar he brings in on the tax side of his business, he brings in another $3 for his planning work. Over the course of those five years, he says he has increased his income threefold.
CE CREDIT
For the rest of the year, Azodi will teach classes around the country, including seminars for other CPAs interested in following in his footsteps. The classes are free and well attended, he thinks, because they offer continuing education credit. Another 400 professionals are expected to finish his programs by the end of the year. He also plans to mentor 100 CPAs in a new program.
"For many CPAs, it's overwhelming to add another level of in-depth education," Azodi says. "They are very detailed-oriented people so it takes them a while to decide."
Ann Marsh is a senior editor and the West Coast bureau chief of Financial Planning.
