Financial Planning

We’re going to do things a little bit different today—we’re actually having two guests on. One is probably the real guest, and the other I’m going to point to as a co-host today. I’m very excited about this. 

First, let me introduce Steven Vono. Steven has actually been a guest on The Unique CPA—he was on Episode 5 talking about professional liability, how to make sure that you stay up to speed with insurance and policies, and make sure you don’t get in any trouble as a firm. Steven has focused on professional liability insurance and risk management for the last, oh how many years? 

25.

25 years, which means he’s old at this point, but still, he’s been there for a long time. I actually met Stephen, oh, it’s close to 15 years—probably 13, 14 years ago now at a conference—and he’s been one of my favorite people ever since. I love every time I get together with him, and I’m really looking forward to him being part of the show today.

And our next guest, or true guest, where Steven I think will co-host the true guest will be John Pastore. John is a Senior Vice President and Private Wealth Advisor with Integrated Financial Partners. And besides that, and more importantly what John does, is oversees IFP’s Professional Partner Program, which is, he works with CPA firm partners to help integrate financial planning as one of their core offerings. 

So that’s why John is here today. That’s why we’re going to be talking about how he can help us as CPAs and what he is doing, and what he can do in our industry. Steven, John, welcome to The Unique CPA.

Thank you very much, Randy. Appreciate the wonderful words. 

Randy, thanks for having us.

Yeah, that’s no problem. I appreciate it. We’ve been trying to do this for a while—I had to cancel a couple times, so I appreciate you guys being patient with me. I’ve just been on the road nonstop. But as a side note, I first met John—I told you when I met Stephen—but I first met John in July of this year, so it’s a newer relationship, very fulfilling relationship, though. And I met John, we were at a conference together in Park City, Utah, having dinner on a Wednesday night, and Thursday at noon, I got diagnosed with COVID. And luckily I didn’t pass it on as far as I know to either of these guys, correct?

No, I had a clean bill of health.

No, I think we survived. Thank you, Randy. I remember a lot of cheese at that dinner, too. We ate a lot of cheese.

There was—well you ordered something specific. Were you the cheese orderer? You ordered something that I remember, in addition to what everybody else was ordering.

That’s right. There’s a lot—I was afraid that we were gonna starve that night, so we did quite the sampling of appetizers. A lot of meatballs, a lot of cheese.

Meatballs—I remember that. Yeah, it was it was a great time. So that night was when we started the idea of, hey, let’s do this together as a podcast, and then a few about 32 emails later, we actually got it coordinated. So that’s the background of this episode. 

This probably around episode 90, I’m guessing right now. Actually, we might be close to 100. All right, so John, the one thing I mentioned, and Steve—Stephen. I can’t believe I just called you Steve. Nobody calls you Steve.

I’m still here. I didn’t explode.

Stephen, jump in anytime. But John, what I just mentioned about your program—why don’t you give us a little background on what this professional partner program is through ISP?

Absolutely. Thank you, and thanks for having us on today. So, you know, we just found that there was a need in the industry that CPAs about 20 years ago, as every state went “green light,” meaning CPAs could receive revenue, you know, there were some big players back then. And we said we wanted to take a little bit of a different approach. So what we did is we just got 40 CPAs or 50 CPAs in a room, we bought them lunch, and we asked them their opinions. And they told us, “You know what, we really don’t want to do this by ourselves. We actually want to do it with a partner.”

And that was the genesis of our alliance with CPAs. And it’s taken off since then. But I think we started with an idea of, we want to make an organization that is unique and really helps the CPA, and it’s where a CPA can be a CPA—and then offer financial services. I think a lot of our competition to this day wants to make a CPA into a financial advisor, and as you both know, CPAs are a little busy. So it’s kind of tough, it’s a lot, to be both. So that’s the genesis of the CPA program—the “Integrated” in our name is truly, you know, really the description of what we do—we integrate partners together for the betterment of the client. And when everybody’s looking at a client’s situation, from a cross-disciplinary basis, the client benefits. And we’ve been building successful partnerships since then.

So let’s talk about that. Let’s see the differences of what, probably, you’re saying traditionally is happening, or what has happened in the last 20 years since the green light went. And as a side note, before we get there, you know, 20 years ago, I tried to integrate financial planning into my practice—which I had merged my practice in 16 years ago—so that was about four years before I did that. But what we tried to do, we were licensed, we were the one out, you know, “selling” for lack of, I guess what you call it, selling the products on the service, selling that financial advice, selling, whatever it was. And like you just said, I didn’t have time to do that. And so the opportunity I know was there, but I just, that wasn’t my one role—it wasn’t my passion really, either. And so unfortunately, it just got ignored. So what you guys do is—I won’t put words in your mouth—but it’s different to that. It’s not all on me as the CPA to go out and do this. So how is that different? You just, they just refer you business? Or how’s that relationship work?

It’s great question, Randy. It’s, you know, we build what’s what we call a “co-source.” We put the advisor inside the CPA firm. Let’s face it, what’s one of the biggest challenges that CPAs have today? Staffing? 

People.

People?

Yeah, people. Yeah, we hear that a lot. Staffing is a very big issue. And to Randy’s point, he just didn’t have the time to do it, and I think what we’re getting into is a little bit of a deeper dive to your earlier comment, John, about when you did the survey with 50 people in the room, and they said, “We don’t want to do it.” This is the “it.” And you guys are providing a way to help the CPA firm kind of grow their revenue with a new revenue stream—which by the way, financial services, many CPA consultants, name any top person that is maybe in Accounting Today or, you know, CPA Journal, they’re all saying that accountants, if they want to increase their revenue stream and kind of diversify, they need to think about ways to include financial services in their repertoire, right? So we hear that a lot. So go.

There’s no doubt. I mean, at the end of the day, they need to make more per average client and not do the work, right? And if you think about it, their clients are leaving their office, and they’re going somewhere to get their financial services done, or, even worse, they’re doing it themselves, or they’re not doing it. So if you really think about it, bringing it in, and having a trusted adviser that works as a team member to the CPA firm, just works fantastic, and the clients are comfortable. They understand the setting, they are comfortable in the setting. It’s a warm relationship from the get go. 

So we realized that the co-source was where we provide the marketing, the compliance oversight, the case design—all things that are needed to get the CPA practice a turnkey solution—we realized that, you know, all that is important, but most important is providing the well trained credential-tenured advisor to execute, that works out of their office. I mean, Zoom has come a long way. You wouldn’t be able to tell that from today’s Zoom meeting, but in most instances, it works out fantastic.

Yeah, so let’s expand on that. So you actually—are the CPAs licensed in this scenario? I assume they still have to be licensed, correct?

It’s another good question, Randy. So it depends on the state. We are a nationally chartered RIA—a Registered Investment Advisory firm, which allows us in states that allow for a solicitor’s agreement, to create a solicitor’s agreement. That can be as simple as just setting it up and that’s a few signatures. We have the operating agreement. We have all of the detail on how to share revenue inside of the CPA firm. We have a brilliant attorney who’s on staff that helps the firms answer those questions and get over those hurdles. But everything is set up. 

Now there are states that don’t allow for solicitor’s agreements. And in that case, you know, we’ve gone from, as an industry, commission-based to fee-based—really acting in the client’s best interest. We are a fiduciary firm, right? So what does that mean? That means we always have to act in the best interest of the client, and the fee-based approach, whether it be fee for management or fee for planning can be shared through one simple license, which is the Series 65 In most instances. So even that, it used to you had to get a Series 7, a 66, everybody that was getting it had to do it. Now we can set up an RIA. There’s a lot of different methods of integration that are available to us now, because fee-based is just a much easier way to work than commission-based.

And I would add as a risk manager, that I like that approach better. So when, John—if any accountant comes to me and says, “Hey, we’re working with IFP, and John is helping us to make our clients more financially sound,” I appreciate that, because it lowers the risk. It’s a less riskier environment to operate as an RIA, as opposed to a commission-based product, like a registered rep situation.

And Randy, you might not know the stats, that we haven’t had so much as a letter of complaint. We’ve been doing this over 20 years in any of the CPA firms that we work with. I think it has to do with, we’re fee-based, we take the long view, we don’t sell commissioned products. It really does help. And in keeping us safe, which is important to Steve.

Yes it is. Steve, do they—Stephen—do they need an additional insurance policy when they bring these services or create this relationship?

So for the accountant, most times, they do not. And, you know, we ask a few questions about how the relationship is set up, and in most cases, the accountant’s professional liability policy will cover that type of a relationship. Because the reality is that they, as the accountant—they’re the relationship manager. They introduce their clients to the folks at IFP, to John.

Mmm hmm.

John and his staff are doing all the financial advisory work, the nuts and the bolts of it. So most of the time—not all times, depends on the insurance company and the policy form—but in most cases, the accountant’s professional liability insurance policy will cover this type of relationship. And you know, there are capacities around that, meaning the type, the amount of revenue generated. If they’re generating over 500,000, then we might have to look a little deeper. But if it’s less than that, in most cases, they’re good.

Alright. And then, so let’s get into that relationship then. So we got to the point where we have this, we integrate the advisor in with the CPA, they’re in office, it sounds like, and then getting referrals from the CPA. One, do I have that correct? And then how, financially, does this work for the CPA?

So it’s one of the most important questions, so I’ll answer with a couple key points. One is that we split the revenue 50/50 with a CPA firm. So a dollar is a dollar is a dollar of revenue. That goes through our grid, I mean, no one gets paid out in our industry at 100%. But despite that, the simple math, 50% through a grid.

The bigger issue is the stream of income. Because right now, for a lot of CPA firms, the revenue from financial services is selling at a higher multiple than their own practice. So we want our partners to have ownership of that revenue stream. And what we do is we give that them ownership through the way that we contract with them. We want them to be partners, we want them to be owners, we want them to grow the value of their business in the long term. Not all of our competition does that, and everybody’s aware of it—everybody’s aware of the endgame, and you know, what these practices sell for. So we make sure that our partners are a part of that, as well as the ongoing revenue stream that’s generated from the relationships to the fee-based planning.

So when you say ownership then, is this a separate LLC that the CPA owns half and IFP owns half, or how does that work? Or advisor owns half? Or how is that, what’s that ownership mean?

You know, it depends on the size of the firm, right? So if we’re talking to a small, solo practitioner, or a couple partner firm, usually they join in, they enjoy the revenue. Bigger firms, more regional firms, you know, then they get paid to either an LLC, or they get paid to an entity which could be an RIA, and then they have an operating agreement to send the money to whoever on the team should be getting compensated. So we help them with that. That’s one of the more complex parts of this, Randy, but it’s also one that we’re very well versed in and we have a team to help them with that correct flow of the revenue. Let’s face it—heavily regulated industry, we want to make sure that they operate safely.

That makes sense. 

And I’ll add to that by saying, we actually just renewed a good-size—$30 million—firm, and they are working with John, and what they did, was they started another entity, and they just, it was the name of the accounting firm, and then at the end of the name, it’s called “Wealth Management Services.” And we add that to the professional liability insurance policy. And, again, it’s very doable. So we just kind of have to look at things on a case-by-case basis to assess the risk, and then figure out how to move forward. 

Okay. And then one thing, John, you mentioned, is the value, which is important. And you had mentioned the value of this ends up being a higher multiple, probably, of revenue than the CPA firm in general? Is that what you see in this situation?

It is. I mean, let’s face it, what’s the multiple for a CPA firm right now? So it’s not too hard to hurdle that, right?

Right.

But I mean, a financial services—a well run practice in the CPA world is probably selling for one, one and a quarter?

Yep. 

Maybe a little bit more than that, maybe I’m being stingy there, but maybe one and a half.

Yeah, private equity might be changing that a little but it’s still not—yeah, you’re right. I mean, traditionally it has been one one of the quarter maybe it’s gone up a little bit, but yes, you are right.

Yeah. So we’re looking and again, private equity has changed that on our end as well. So you know, typically a direct sale to another financial advisor, it’s somewhere between two and a quarter to two and a half. But even that multiple’s growing, and growing considerably, because it’s recurring revenue.

Right. And then that’s the other thing besides that, it’s just, and you mentioned it earlier, John, too—one, just in general, most industries, CPA not being exempt from this, and probably being more affected—from the employee issues. People are just not going into the profession as much as they were in the past. Enrollment in universities is down. Enrollment, or people signing up to take the CPA exam, are down. And when people get into public accounting, they’re not staying that long. They’re going somewhere else. 

And so anything a CPA firm can do to almost generate this revenue, with not having a lot of hours attached to it—and I’m guessing that’s the case—if we can make money without hours, because traditionally, we make money by our time, which has to change in general anyways. But this is one way that that really could change, and then you’ve got that revenue stream. And I’ve talked to many firms that have been doing this for a long time, and that revenue is higher on the financial services end than it is on the accounting end, often. Or at least a bigger portion of the profit margin.

When done correctly. And you know, what else to I think what we’re leaving out is, you know, the startup costs on this, with us fronting the personnel, with us, you know, heavily trained individuals, a planning team behind them—the startup cost is extremely low. And then the other residual benefit of that is making your clients “sticky.” You know, studies show that the more services that are offered to any client, whatever you’re selling, from one place, makes it harder for the client to decouple from that business. But I certainly think that’s true in the CPA world.

Yeah, and I agree with that, from that standpoint. I agree that it’s important to outsource it then to, which is really what we’re doing, we have the relationship, we’re outsourcing. Because CPAs in general, I’m a huge proponent of niche expertise, or niche practices or niche industries, because the deeper you can dig into certain parts of whatever it is—you know, an industry—you’re just going to become the go-to. But that doesn’t mean you can’t have other services—you just outsource or you bring in experts in those other services. And I think this is a great example of being able to do that, generate revenue, keep your expertise in your niche, use someone else’s expertise to get the services to your clients. 

So I feel like I’m going on rants today—that’s another rant. I just want them but I think that’s important.

I love it, Randy. You actually describe it better than I do, so thank you. 

You know, what I would add to that is that our advisor can cover ground that needs to be covered. So what I mean by that is, year-end tax planning. You know, there’s some firms that we work with that they’re glad our advisor is starting to lead the charge of bringing some new, fresh ideas which give them a few more arrows in their quiver. People want new, fresh ideas. The number one reason why any client the provider of advice leaves is that there’s not any new advice, new ideas, or they’re just calling to make a sale. 

You know, right now we’re in a pretty complex tax world. I mean, think about it. This is the first down year ever since the pandemic, but we had a pretty good run before that, that you could tax loss harvest, that you could think about your retirement plan, you can think about ways to really impact that bottom line when it comes to taxes. And I think that the collaboration between an advisor, especially one that understands the retirement plans options, and a CPA firm, it’s priceless. 

Hey, Randy, if I remember correctly, aren’t you involved in an entity called The Beer Temple?

I am involved in The Beer Temple, correct.

And if I remember correctly, we’ve actually talked about The Beer Temple on The Unique CPA in the past.

It’s been mentioned with many guests, yes.

Yeah. Many, many guests. 

Yes. 

So to your point about owning that business—that’s a niche business. 

It is.

Right? But in most restaurants, the bar carries the restaurant. I used to work in the restaurant business many, many, many years ago. And in some ways, this RIA partnership can help carry the CPA firm in a similar fashion. John and I share a client—I write the professional liability insurance. It’s a very small firm, just two owners. And each member of that small firm, they do about, I don’t know, maybe 600 to 700,000 in tax revenue. They’re pretty high end. But on the RIA side with John, I think they’re both pulling in better than 400 grand.

Nice. Yeah.

In addition to their tax practice. Is that a fair estimate, John?

It absolutely is. And you know, they actually do speaking engagements for us. And what they realized very early in the game was that, “Don’t make it hard.” Right? It’s just, it’s pretty simple—the marriage between financial advisor and CPA is a natural one. Don’t make it awkward. Just bring it up. Good ideas are always well received by intelligent people. Hey, people have advisors. If they’re happy with them, maybe we’ll bring up a couple ideas that their advisor didn’t bring to the table. That’s okay. Client still benefits. And if not, hey, the door might open. 

Right. Alright. Before we maybe start wrapping up. One question I’m going to have is, what objections do you get from CPAs? Because there’s going to be objections out there. And what is like the most common one? And then how do you address that?

Probably the most common one is time. 

Okay.

That they don’t have the time to do this. And you know, my answer to that is, you don’t have the time to make more per client, and not do the work, is really my answer. But, you know, really, when you break it down, and we look at how much time it takes to start this, we’re doing the client meetings, we’re doing the compliance oversight, we’re presenting all the designs, and we’re creating the design work, and we’re maintaining. So really all that is the time that it takes to make an introduction to recognize the need. And there’s so many firms that we work with, over 150, that just see the opportunity, and then they transition it.

I would like to add to that. And I think that in their mind, they think the biggest objection is time. I think that to John’s point, what they don’t understand is it’s their misunderstanding of the relationship and their misunderstanding of the way things are done, that is their biggest obstacle. 

Mmm hmm.

Once they dive into it, in their mind—I think a lot of us whenever we take on a new venture, we feel like we’re going to swim underwater for days and days and days before we can finally come up for air. The reality is that’s not the case here. It’s as close to a turnkey operation—is that a fair statement, John?

Yeah, absolutely. And you know, the other big objection that I get is that I’m going to lose clients—did I just do it again? Did I just move closer to the mic?

Yeah you did. We can still hear you. Stay in your zone. Stay in your zone, John.

Hey, he’s excited. This is exciting stuff. You got to get in there.

I gotta get right up in there anyway, so—

Well, we don’t need to see your nose hairs, so.

I thought the people wanted that. But anyway, The second one is, is loss of business and referrals, which, you know, I mean, I think both of those objections are limiting beliefs. There’s more business. I mean, I think that successful CPAs come at the world from a mindset of abundance, not of scarcity. You know, I think that if any client’s gonna walk away from that, they probably weren’t a great relationship to start with. And most CPAs I know right now are having a capacity issue. So losing clients should not be an issue. 

That said, we help retain clients, bring new clients on—and the ideal type of client—because we spend a lot of time from our relationships, trying to make sure that we cross-feed our partners as well, and help them find their ideal client profile. 

John, I think that it was a great wrap up of the importance of this and why people need to look at it, and so before I ask how people get ahold you—and I’ll do the same with you, Stephen, although people could look back at episode 5 and see how to get a hold of you—but before I ask that, one question I like to ask about you, John, and we’ll do the same with you, Stephen, is, alright, this is great. We know what you do. We know you both are in, you know, insurance and financial services. But what do you do that’s not work-related? What are your fun stuff? What’s your passions outside of work? John, let’s start with you.

What are my passions? Sheesh, uh, trying to learn how to golf because I’m just terrible at it. And then I spend a lot of time on sidelines. I’m a “sideline professional,” watching my daughter play soccer and ride horses, and watching my son play baseball. So I am excellent at standing for many, many hours, all different temperatures. That’s what I like to do. Randy.

Alright. Got it. And Stephen, we’ve gotten some from you before, but let’s hear let’s hear your outside of work passions.

My outside of work passions would include, definitely, music—I enjoy going to live shows. I also have a large collection of vinyl records that I talked about a lot. And actually, we at McGowan, we are launching a new podcast. 

Oh, wow. 

And it’s going to be called Risky Records. And the first portion of the show, we will be talking about risk management—how to manage risk for accounting firms, have some real good advice on things to do to lower the accounting firm’s exposure. But then the guest will pick a record. I’m in a different office today, but if I’m in my home office, you would see my record collection behind me—

—I’ve seen it.

Quite impressive.

It is.

So I’ll pull a record off the shelf. And we’ll talk about it, just to kind of do things a little differently.

Okay, so I’ll have to check my email because I didn’t see it yet, but I’m guessing I got my invitation to be a guest on that show already, right?

Oh, definitely, although—

—I’m assuming I’m probably not going to be after this.

We’ll just send you a microphone ahead of time.

Yeah. Well build a net in front of the laptop so you don’t lean in so close.

Or maybe a headset will keep you from moving, because then you know, you got the sound right there on your face. 

We’ll tether you.

We want to thank you, though, for having us on to what might be your 100th episode. 

Yes.

it might be—honestly, I should know this, and we’re really close to that right now. So if it is, hey, congratulations, that was the best guests ever for a number 100 episode. If it wasn’t, whoever’s on the 100th will be my best guest ever.

Where are the balloons falling from the sky, Randy? Hundredth episode, balloons?

Yeah, I should. We’re gonna have to do that. Justin will edit that in after the fact. So, alright, so John, if people were intrigued and want to hear more, how do people get ahold of you?

Certainly, if you just go to IFPadvisor.com, and you can just go into the partner section of our website and it has great detail on our whole process. You can also contact me directly at John.Pastore@IFPadvisor.com as well. 

Nice. Alright. And Stephen, you?

Just give me a call at 508-816-9510. Stephen Vono, as opposed to Steve, but if you call me Steve, I’m okay with it.

I know, but you’re Stephen to me. You always have been, you always will be.

Are you going to hug me now?

I am. A virtual hug through Riverside—or “Little Stevie.” So you’re Stephen or “Little Stevie.” One of those two.

Well, if I have a harmonica in my hands, I’ll be Little Stevie. 

Alright, there you go. Well, I thank you both for being here today. I want to thank all the listeners for making it all the way through this episode today, with our goofiness, but we had a lot of fun today, and I appreciate everybody being here.

Thanks so much. Take care, Randy.

Thanks so much. I appreciate it, Randy.