David Appel, Tax & Business Partner, Quoted in South Florida Business Journal Article – Wealth management ages with baby boomers

Excerpt:

It’s been about 20 years since most states lifted restrictions against accountants performing wealth management services.

South Florida accounting firms have taken advantage of that to varying degrees. While almost all of them offer some kind of financial planning service, some have not considered it to be a key focus.

“We operate a service for our clients, a family office service, but we are not investment advisors,” said David Appel, a partner with Marcum LLP in Miami. “We work with their existing adviser or recommend based on their assets and needs.”

Appel described Marcum’s services as something baby boomers need as they begin transferring wealth to the next generation.

Although the number of people involved in such financial planning is small at Marcum, Appel said the firm believes it’s a long-term growth area.

“It’s an outgrowth of what we do on a daily basis, with some additional in-house training and organizational changes,” he said. “It’s a significant part of our revenue base.”

On the other hand, one locally based firm has become a major player in true wealth management, amassing almost $1 billion in total assets managed, ranking it 19th in the nation for wealth management firms, according to Wealth Manager magazine.

The firm is Miami-based Berkowitz Dick Pollack & Brant, through its 10-year-old sister company Provenance Wealth Advisors.

Richard Berkowitz is managing partner at the accounting firm and on the board at Provenance. He said accountants with the firm always provided financial planning, but had noticed that some of their client services were lacking in the tax planning area.

“We felt that we really understood the entire picture: financial investment, estate income tax, business taxes,” Berkowitz said.

That’s where Eric Zeitlin, a financial planning professional, came in. He is managing director and board member at Provenance.

“We started creating an approach that would allow our clients to have efficient means of working on their total estate planning,” Berkowitz said.

According to Zeitlin, having a CPA and a financial planner sitting at the table is a balanced approach, and the CPAs never share in any kind of contingent payment and are not compensated on any product sold.

Zeitlin and Berkowitz said Provenance incurs a heavy upfront cost to do a situation analysis for clients, projecting the health of their investments over time.

“Almost 99 percent of the time, people will say, ‘wow, I’m not happy with this, I can’t believe it, I need to do something different,’” Zeitlin said.

Provenance employs about 25 people, while Berkowitz Dick Pollack & Brant employs about 125.

Berkowitz recalls that, in the beginning, referring wealth management clients to Provenance wasn’t necessarily natural for some of the CPAs.

“It wasn’t like everyone at the firm jumped in and said, ‘oh boy, let me hand over my clients and let’s do this.’ Eric had to beat the bushes a little,” Berkowitz said.

Jeff Koch, a partner at Goldstein Schechter Koch, is in charge of its wealth management subsidiary, KR Financial Services.

“We started this in 1997 after the rules changed about CPAs and wealth management,” Koch said. “I’ve always been one of these people who are fascinated with the stock market. I had seen examples of stockbrokers putting unsuitable assets in portfolios at the end of the year, or doing excessive trading. When they changed the rules, we ran with it.”

KR Financial manages about $125 million in assets, but does not sell investments, he said. The company has two CPAs or personal finance specialists, two administrative staff and two support staff.

Koch spends about three-fourths of his time on wealth management, he said.

Berkowitz said the global economy, the recent recession and rampant financial fraud have made investors more leery of wealth management in general.

“Today it is unbelievably complex. It’s very difficult for people to know what to do, and how to keep their money safe,” he said. “It’s a very harsh financial world, and it comes down to who you trust and whether financial advisers earn your trust.”