For more than 20 years, Homer Smith of Konvergent Wealth Partners and the Integrated Family Office has been developing a client service model focused on guiding high-net-worth business owners from growth through the transition of their business and their wealth. He works extensively with accounting firms to help them optimize their financial and personal lives of their clients.
Russ Alan Prince: Tell me about your firm.
Homer Smith: Konvergent Wealth Partners was founded in late 2019 after I left a large broker/dealer in order to more holistically work with business owners and their key professionals. I met Paul Saganey from Integrated Partners and he shared the same vision of building a more robust and collaborative relationship between CPAs and advisors to bring more value to clients. One of the key attractions to working with Paul was playing a key role in developing the Business Owners Solutions and Family Office practices at Integrated.
Over the last 12 years, I have been bringing many of the advantages the super-rich—who are families with a net worth of $500 million or more—receive from their single-family offices to families with a net worth of $20 million to $100 million. While there are many definitions of a family office, for me it is simply being the coordinator of experts that my clients need to optimize their financial and personal lives.
Prince: What’s your role with clients?
Smith: My role is to get to know my clients at a deep level. I make a concerted effort to know everything and everyone important to them and how these people would be impacted by their decisions. In conjunction with my team of specialists, we identify the strategies and solutions that would meaningfully improve their businesses or their family wealth. I then make certain they understand the advantages and disadvantages of each proposed strategy or solution so they can make smart decisions.
For many of our clients—especially many of the wealthier ones—we are instrumental in enabling them to legally pay fewer taxes—both now and in the future. We work extensively with business owners in helping them either transition their companies to the next generation or maximize their personal wealth when they sell. For just about all our clients we assist them in protecting their wealth from being unjustly taken through malicious and unfounded litigation.
Prince: But wealth is also about making an impact. How do you help clients do that?
Smith: A large percentage of our clients want to make a difference in their communities or the world at large. We show them how they can make a significant difference tax-effectively. To sum it all up, our ultimate goal is to help our clients optimize their financial world and many facets of their personal lives.
Prince: Growing a great business can be difficult for some advisors. Can you provide us with some perspectives on how you partner with accountants to deliver value to their top clients?
Smith: I partner with a small select number of accounting firms to deliver to their top clients, who are often far from super-rich, the same strategies, and solutions used by many of the super-rich. Put another way, I work closely with accountants to help them identify opportunities to bring more value to their clients. My team and I empower accountants to identify strategies that could save their clients millions of dollars over time, better protect their hard-earned assets from being unjustly taken, help improve the value of their business, and get their business ready for sale when the time comes.
Our approach to partnering with accountants is to, first and foremost, make sure their clients are getting exceptional value. Secondly, the accountants have to earn significantly more. A powerful outcome of partnering with accountants is that they become substantially more successful. This takes several forms including regularly and predictably being introduced to new clients for accounting and advisory services. Very importantly, we help our CPA partners build their own family office framework for their top clients.
Prince: A large percentage of entrepreneurs are likely to sell their companies over the next five years or so. What is the opportunity here?
Smith: In the next five years many successful business owners will sell or in some way monetize the efforts they have put into their business over the years or even decades. At the same time, there is a lot of capital out there looking to be on the other side of those transactions.
While there is all this potential, we also know that most successful business owners do not end up highly satisfied with the outcomes of their sales. In reality, only about one in ten owners that complete the sale of their business say they were highly satisfied with the outcome. The reason for this is likely a combination of a lack of pre-sale corporate planning and pre-sale personal wealth planning.
On the corporate side, the business did not do enough to identify and reduce the risk in their business or to execute a consistent growth plan. On the personal side, they did not do enough tax planning to minimize taxes on the sale and into the future as well as did not do enough to structure their estate to make it easier to create a family legacy and to protect the assets from financial predators.
Utilizing the expertise of the family office framework that we developed at Konvergent and Integrated Partners, we will give those business owners the best chance to end up with a highly satisfying exit from their business. The bottom line is that these successful business owners almost always end up with a lot more money than they would have otherwise received.
Prince: What do you see as the opportunities for accounting firms who are interested in working with successful business owners and the wealthy?
Smith: When it comes to business owners, the opportunity for CPAs to be in the middle of this historic wealth transfer is incredible. However, for many accountants, capitalizing on this once-in-a-lifetime opportunity is going to require making some adjustments to their practices. Also, with the burgeoning increase in private wealth throughout the world, accountants who can bring the family office framework to their top clients will have the best chance to remain in the “most trusted advisor” position that they have been in for years.
While, in many practice areas, accountants are under pressure, those accountants working with successful business owners and wealthy families who have adopted some form of family office framework are going to excel. Not only will they be doing a better job for their clients, but they will be generating significantly more revenues for their firms. They are also likely to find the competition has pretty much evaporated.
Prince: Is this approach right for all CPAs?
Smith: This approach is not right for all accountants. However, for those that want to grow their practice by working with fewer, wealthier business owners and families, the opportunities over the next five years can be a game-changer for them.
Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals. Connect with him on LinkedIn.com.