General Electric is one of the best-known brand names in the world, and the representatives of its tiny business unit in the advisory space, broker-dealer Terra Securities Corp. and sister RIA Terra Financial Planning Group Ltd., found that gave them a certain cachet with clients. But when the house that Jack Welch built spun-off its GE Financial and GE Mortgage segments in May, Terra's nationwide force of 2,200, most of whom are CPAs, enrolled agents and other tax professionals, suddenly fronted a new entity that, at least initially, was rather faceless.

The divested businesses now go by Genworth Financial-hardly a household name, although after the firm spends an expected $30 million on brand-creation advertising, perhaps it will be. Still, the recent spin-off is merely the latest in a long history of metamorphoses for the Schaumburg, Ill.-based brokerage.

For the beginning of the tale, you have to flash back to the dawn of the 1980s. Remember 20% interest rates? Picture the plight of two commercial realtors.

Even in the prosperous western suburbs of the Windy City, the commercial-property business was the pits. "That was the impetus that led us to explore selling other investments," says Terra founder and president David Reedy. He and his business partner at the time reasoned that they had investment clients. Why not try to put them in something besides commercial real estate?

"So we looked at the independent broker-dealers we could potentially affiliate with," Reedy says, "but they all seemed like snake-oil salesmen. They were syndicating oil wells, diamonds, guns, movies-partnerships in anything that could create a tax loss. We didn't care much for that, so we started a $5,000 broker-dealer registration with the NASD, anticipating that we would be the only reps." The name Terra-Latin for earth, or land-was chosen as a symbolic link to their days in real estate.

Over the next several years, Reedy earned the CFP designation and developed a viable financial planning practice along with a handful of business partners. Then came a compromise between the American Institute of Certified Public Accountants and the Federal Trade Commission-spurred by the feds' investigation of certain AICPA policies-opening the door for public accountants to accept commissions and fees.

Suddenly they could make money doing financial planning, and Reedy knew plenty of independent accountants. He had called on them in his real estate career.

Reedy walked back into those same accounting offices as chief of Terra Securities, and instead of asking for client referrals, he says, "I suggested that they get licensed with us so we could work together. One day, someone said, 'Sounds like a good idea.' He became our first rep and is one to this day."

Adds Norm Mindel, an early Terra principal who is currently executive vice president: "Our model made the accountant the front-line planner so that he could maintain and control the client relationships. Accountants don't want to refer out their client base just to share fees."

Keys To Success In Courting Accountants

As the brokerage worked with a growing number of thriving tax practitioners, several lessons emerged. First, veteran accountants are ideal candidates for financial planning. Not only do they have literally hundreds of clients to solicit, they frequently are analytical nerds who already know the tax side.

Plus, bean counters typically own their clients' unwavering trust, a key for success in planning. However, the time that someone with a full-blown tax practice can devote to planning is necessarily limited. Yet because compensation isn't tied to the timeclock, even a part-time commitment can efficiently leverage hourly earnings. "A successful CPA may be billing $150 an hour, but there's potential for increasing that when you add financial services," Mindel says. "Even in the early days, our business model was [speaking to an accountant], 'Why don't you get licensed with us and incrementally increase your revenue?'"

The prospect of tiptoeing into planning on a part-time basis has worked out spectacularly in certain cases. "We've had some reps sell their accounting practices and live off of trails and fee income from our money management business," Mindel says. But more commonly, Terra is left to persuade the accountant-rep to reorient his practice in order to free up time. "We try to get them to either raise their billable rate to (eliminate) some of their marginal tax clients, or take on a younger associate to handle that lower-end tax practice," Mindel says.

Terra executives also discovered that mining an existing client roster breeds a certain conservatism. "An accountant's greatest fear is losing a tax client (someone who is paying the rent) over bad investment advice," says Mindel. "The accountant never wants to do anything wrong" as a money manager.

Terra's response was to construct well-balanced, diversified, sensible portfolios in the home office and disseminate the recommendations to the field. Today on the fee side of the business, for example, Terra has a proprietary program that places clients in the passively managed, index-like asset-class funds of Dimensional Fund Advisors. "We've been taking an asset allocation approach since the mid-1980s," Mindel says. "Reps who followed our models avoided the Internet bubble."

Recommendations are restricted to mutual funds-no individual securities, hedge funds or private placements. Mindel says that this conservative, long-time-horizon approach to investing "gives the reps a tremendous degree of comfort." Eschewing exotics undoubtedly contributes to Terra's pristine compliance history, something that made it attractive to image-conscious GE.

Intensive field support is obviously essential with such centralization, and Terra bombards its representatives with teleconferences, regional meetings and national conclaves covering all areas of financial planning as well as practice management issues. When clients require sophisticated solutions, reps can draw on the advanced marketing resources of Genworth's life and annuity companies.

Looking For A Few Good Planners

Non-tax professionals have always comprised a small proportion of Terra's representatives. In 2002, however, the broker-dealer started recruiting financial advisors in earnest. After selling Terra to GE in 1998, Reedy was charged with expanding the then-385-rep B-D beyond the borders of Illinois. But wouldn't new markets require a local presence to provide the high-touch field support that had become Terra's hallmark?

Enter the regional director (RD) program, an initiative designed to marry the broker-dealer's well-honed compliance infrastructure and training methodology with seasoned financial planners such as Terry Kingsbery of Norman, Okla., who had more than three decades of advising under his belt when he transferred his book of business to Terra about a year ago. "My responsibility as a regional director is to recruit, hire, train and assist in any way the (accountant-reps') transition from just doing tax planning. I am constantly in their offices providing on-going training," says Kingsbery, adding that his career move "is paying off handsomely."

Planners have long viewed associating with accountants as a path to a larger practice. "And we have those centers of influence," says Mindel, noting that the typical accountant-rep has been practicing for more than a decade and maintains at least 300 to 500 client relationships. "We can say to a financial advisor, 'You're looking to expand your practice. We've got tax professionals in your community who need help. Let's put you together.' That increases our revenue potential in that area, and everybody wins."

Terra's presence in central and eastern Oklahoma has grown considerably. After starting with five reps in mid-2003, he had 16 one year later. "We'll have 30 by the end of 2004," he projects. Besides earning overrides, Kingsbery works jointly on cases with reps. To introduce an accountant's client to the products and services available through Terra, Kingsbery typically prepares a financial plan for the client and co-presents it with the accountant (which further trains the tax practitioner). The pair split any revenue generated.

The program works, Kingsbery says, because the accountants know that a veteran planner such as himself has paid his dues, too. "We (both) understand how important it is, long term, to create a solid client relationship. Therefore they feel like we're on the same side of the table and that I'm not just there to be selling something," Kingsbery says.

Furthermore, many tax practitioners are afraid of losing market share to other accountants offering financial services. "So they're very anxious for help from people who can take them to the next level," Kingsbery says.

Terra officials call the RD program "reasonably successful" but are quick to point out their limited ambitions. "It wasn't done with the idea to have hundreds. We really are looking for the right type of person," Mindel says.

The ideal RD candidate has a squeaky-clean compliance record, probably earns six figures, and is highly experienced. According to Reedy, Terra has about 30 regional directors so far. "We would like to be represented in every major city in the country," he says, adding that large metropolises may be able to support several.

Currently, approximately 800 of Terra's 2200 representatives are located in the Midwest. There are also significant concentrations in California, Florida and the Northeast. Mirroring the industry trend, Terra reps are increasingly migrating to fee-based compensation. At present, about 15% work partly or entirely for fees.