Buckingham Asset Management and its sister firm, BAM Advisory Services, are proving that accountants can successfully make a transition to investment management.
Fifteen years into his career as a CPA specializing in tax and financial planning, Bert Schweizer could tell that something was up when it came to the touchy subject of accountants giving investment advice. The number of clients asking for investment help always seemed to increase, as did the instances in which Schweizer had to politely turn them down.
Too often, he recalls, Schweizer would draw up an asset allocation plan for a client and then, upon their return weeks or months later, see that it was totally ignored by a broker-along with any thought of diversification-when it came time to pull the trigger on investing.
There were also the annual conferences, at which Schweizer saw more and more accountants attending investment advisory sessions, and the gradual liberalization of regulations that had historically prevented accountants from giving investment advice for a fee.
By 1994, Schweizer was convinced that bringing an RIA component into his St. Louis-based practice was not only an option, but also an obligation on his part to fully serve his clients. There was, however, one problem: His partner would have none of it.
"He was 20 years older than me and just old school," Schweizer says. "His thinking was CPAs don't have the competency and skills to give investment advice. We reached an impasse."
An impasse that was finally solved by Schweizer deciding to leave a firm where he had spent the prior 12 years of his career and then hooking up with three partners, including Stuart Zimmerman, a like-minded accountant who also felt the tea leaves were pointing to a role for CPAs in the investment advisory arena.
"I very much believed that CPAs were the premier provider of financial planning and investment advisory services, and I wanted to go out and prove it," Schweizer says. "And my clients wanted me to do it."
As it turned out, Schweizer and his partners not only proved to themselves that accountants could thrive as RIAs, but they're also proving it to hundreds of other accountants through a firm that provides advisory services and training for accountants transitioning into investment advice-giving.
The first company, Buckingham Asset Management in St. Louis, got off the ground in 1994 with $400,000 in startup capital from four outside investors. It has since grown to serve just under 1,000 clients and more than 2,400 portfolios, with assets under management of about $600 million. The firm's offshoot, BAM Advisory Services, was founded in 1997 and now provides services to 100 RIA firms, of which 90 are run by CPAs. Growth at BAM, in fact, is outpacing Buckingham Asset Management. BAM currently serves firms that, as a group, have about $1.9 billion in assets under management, a figure that grew by 80% in 2002.
When you consider that, as a group, accountants have been moving into the investment arena at a glacial pace-despite perennial predictions that they are going to take the industry by storm-Zimmerman feels that BAM's best days lie ahead. "It's all going in the right direction, and the CPAs are coming," Zimmerman says. "I can't tell you how quickly they're coming or how slowly, but the answer is, they are coming."