Should Advisors and Agents Share Fees with CPAs?

Fee Sharing with CPAs: A Comprehensive Guide for Financial Advisors

At Elite Resource Team, we've spent a decade working with CPAs and high-net-worth clients. Over the past five years, we've trained over 700 advisors across the US, Canada, and UK in building CPA partnerships.

Common Questions Addressed

1. Should I split fees with a CPA?
2. What if a CPA does audit work?

Understanding Different Types of Fees

1. Assets Under Management (AUM)

Key Considerations:

• Is the CPA securities licensed?
• If licensed, what percentage of their revenue comes from AUM?
  • Over 20% = Potential red flag
  • Under 5% = Ideal scenario
• Recommended split: 20-50% of collected fees

2. Insurance Revenue

Best Practices:

• Easiest to implement
• Less compliance complexity
• Recommended split: 50/50
• Don't push licensing if they're not already licensed

3. Specialist Fees

Examples Include:

• Business valuation
• Cost segregation
• Cost remediation
• Bookkeeping services

Implementation:

• Typically 15% referral fee
• Share 50/50 with CPA partner
• Works well for both licensed and non-licensed CPAs

4. Tax Planning Fees

Important Notes:

• Separate from tax return preparation
• Example: $7,500 fee for comprehensive tax planning
• Can save clients significant amounts annually
• Share 50/50 if sharing other revenue streams

Working with Audit CPAs

Challenges

• Cannot share in commissions due to independence requirements
• May affect motivation for partnership

Solutions

1. Explore their business goals
   • Consider shifting focus from audit work
   • Potential to hire junior accountant for audit work
2. Alternative Partnership Options
   • Partner with non-audit focused CPAs in the firm
   • Work with other tax-focused professionals

Best Practices for Partnerships

Revenue Sharing Guidelines

1. Keep splits equal (50/50) when possible
2. Share specialist fees regardless of other arrangements
3. Maintain consistency across revenue streams
4. Focus on value creation before revenue sharing

Building Strong Relationships

• Meet in neutral settings (lunch preferred)
• Focus on identifying inefficiencies
• Discuss comprehensive planning approach
• Emphasize team-based model benefits

Modern Approach to CPA Partnerships

• Move beyond simple referral relationships
• Implement team-based model
• Focus on comprehensive, proactive planning
• Create family office-style service model

Next Steps for Advisors

1. Evaluate current CPA relationships
2. Assess revenue sharing opportunities
3. Consider compliance requirements
4. Develop clear partnership structure