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By LINDA COBURN
Contributing Reporter
Like so many professionals, accountants are constantly seeking new ways to better serve their clients and bring more revenue into their firms.
For some in the world of accounting that has meant expanding the menu of financial services they offer.
Increasing numbers of CPAs are becoming licensed insurance agents or securities representatives, receiving commissions for products they sell while also receiving fees for advisory services.
The accounting community is divided about whether this trend is positive.
Some, like CPA Steven Fishman, partner in the Encino firm of Fishman, Block Diamond LLP, feel the potential conflict of interest in making money by selling products like insurance or securities is too great.
“I don’t do any of that,” said Fishman. “The concern I have is, how do you know, on behalf of your client, that you’re giving them objective, honest advice?”
That’s why he has stuck with providing what Fishman terms the “traditional services” of auditing, compiling and reviewing financial statements, and tax and wealth planning.
“I like being able to play sort of cop, telling people, ‘No, this doesn’t make sense,’” he said. “And that’s hard to do if you’re also their insurance broker or their stock broker or that sort of thing.”
Fishman says that he believe most entrepreneurial CPA’s are honest and ethical and can wear both hats well.
“But if I lost a client’s money even if I lost money too I would feel horrible,” said Fishman. “If an investment goes bad, you get sued and you know, malpractice doesn’t cover that plus you lose a client and I can’t afford that or stomach it.”
The trend toward offering more services has not led to any increase in complaints or suits according to Ron Klein, vice president-claims counsel for CAMICO Mutual Insurance Company, the liability insurer for the California Society of Certified Public Accountants, or CalCPA.
“CPA malpractice is a very low frequency event,” said Klein. “We insure 7,000 firms across the country and maybe once or twice a year it happens.” Klein explained that in California a CPA must disclose to their client, in writing, any commission they would receive prior to any transaction such as purchasing an insurance or investment product.
“There’s nothing unethical or inappropriate about it,” said Klein. “It’s the CPA acting as the primary business or financial advisor, which is the traditional role of a CPA who is not an auditor.”
There are a myriad of rules and regulations surrounding the provision of commission-based services, including a requirement that CPAs create discrete entities that keep fee-based accounting services separate from commission-based product offerings.
That’s why CPA Dennis Rose heads two practices in Sherman Oaks.
The two companies, Dennis F. Rose
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