Certified public accountants who serve small businesses are poised to offer 401(k) plans to their clients, said Chandra Bhansali, president of AccountantsWorld LLC, an online company that provides payroll assistance to 110,000 accountants.
A mail study completed by the Hauppage, N.Y., company in October found that 23 of the 50 accountants who responded said they wanted to be able to offer 401(k) plans.
Accountants increasingly are being asked to offer the plans, according to Mr. Bhansali, whose company recently partnered with East Windsor, N.J.-based ExpertPlan Inc. to offer a 401(k) platform that accountants can provide to their clients.
"Small businesses trust their accountants more than they trust a stockbroker or anyone else, and that's why they feel more comfortable working with an accountant," he said.
Because accountants are so trusted, smaller CPA firms might develop a niche in offering retirement services and setting up retirement plans for clients, said Dwight E. Kellams, a sole accounting practitioner and financial adviser in Fishers, Ind., who is about to launch a personal-finance blog, Your Financial Watchdog LLC.
Having the ability to implement retirement plans is a natural transition for CPAs because most of them already help clients fill out tax papers for retirement accounts, he said.
"CPAs are a natural from a planning standpoint because they understand different retirement plans," Mr. Kellams said, adding that CPAs can help clients reduce expenses by finding the most suitable 401(k) plans.
Still, Mr. Kellams, who has helped clients set up 401(k) plans, thinks that CPAs will take a cautious approach in offering 401(k) investment choices.
"The overriding objective of any CPA in public practice is not wanting to take risks and not wanting to lose clients," he said. "[The possibility of loss] scares them to death and prevents them from getting into financial services."
Larger CPA firms might face conflict-of-interest issues if they offer the service, Mr. Kellams noted.
In offering 401(k) plans, accountants may partner with plan administrators and record keepers, said Ross K. Brown, senior vice president of ExpertPlan.
While individual accountants have approached his firm about offering a 401(k) platform, he said he thinks that joining forces with AccountantsWorld would broaden distribution and give more accountants access to his web-based services.
Mr. Brown agrees with Mr. Kellams that the most appropriate niche market for accountants is small businesses and that working with third-party record keepers could be helpful.
J. Peter Doyle, a certified public accountant and president of the fee-only planning firm Doyle Financial Ltd. in Fox River Grove, Ill., has chosen not to sell retirement plans to clients.
"The Pension Protection Act [of 2006] has raised the bar on fiduciary liability, and that's something to be aware of," he said.
Although he doesn't offer 401(k) plans, Mr. Doyle said, he understands why many of his peers have chosen to do so.
"You're their trusted adviser and the first person they'd contact with that sort of issue," he said. "I think we'll see more accountants doing this. Like so many things, the industry has evolved."
Lisa Shidler can be reached at [email protected].
