BIG CHEESE CPA FONDUED FOR AMEX LINK: ASSOCIATION CHIEF’S FIRM SOLD TO TITAN

Stuart Kessler, one of the first CPAs to offer financial planning services 20 years ago, is embroiled in a dispute with his peers surrounding the sale of his firm to American Express Co.

A mom-and-pop accounting organization of which Mr. Kessler was a charter member in 1979 is calling for his resignation as chairman of the American Institute of Certified Public Accountants. The gripe is that Mr. Kessler continued as chairman of the AICPA, the industry’s largest organization, while his firm, Goldstein Golub Kessler & Co. PC, was negotiating to be sold to American Express. The deal closed last month (InvestmentNews, July 20, 1998).

“It just doesn’t appear proper,” says Ed Kliegman, a retired accountant and spokesmen for the National Conference of CPA Practitioners, of Lake Success, N.Y., a lobbying group for more than 1,100 small firms across the country. Many of its members are also members of the AICPA. “We think he should be looking out for our benefit — not for American Express.”

The AICPA’s board reviewed the issue and says it did not find a conflict of interest, says the group’s president, Barry Melancon. Mr. Kessler contends he stepped off the firm’s executive committee when he was named chairman-elect, in October 1996, before American Express was “a blip on the horizon.”

He also says he stopped attending partners meetings after reading about rumors of the American Express acquisition in InvestmentNews sister publication Crain’s New York Business earlier this year.

just one naysayer

But the dispute illustrates the view among some independent practitioners that American Express, which over the past three years has acquired more than 70 large accounting firms, is a major threat to their business and to CPAs’ hard-earned reputation for objectivity. They argue the charge card giant will eventually compel accountants to sell everything from financial advice, mutual funds and annuities to business loans. Amex, for its part, has said its CPAs can continue using any financial products they choose.

Mr. Kessler maintains few peers have had the same reaction as Mr. Kliegman. So far he has received only one letter of discontent from a CPA in Wyoming whom Mr. Kessler says he immediately telephoned and offered his explanation. “My heart has always been with the small and medium-size firm,” he says.

Born and raised in the New York City borough of Brooklyn, Mr. Kessler started his own firm, Rothstein Kessler & Co., in 1960, and then merged with Stanley Goldstein in 1970. The firm has since grown to 55 partners with $50 million in annual revenues and serves corporate executives and family business owners.

Mr. Kessler is a tax lawyer and provides his clients personal financial planning and asset allocation advice. He does not recommend specific products, nor does he accept commissions, a practice that’s against the law for CPAs in New York, but is now permitted in many other states. He has been named to Worth magazine’s annual listing of the best 200 financial advisers.

In fact, he raised eyebrows during his AICPA inaugural speech when he suggested that accountants change the name of their accreditation from certified public accountants to certified professional adviser, which he calls “more encompassing.”

‘not a new issue’

As for the AICPA, the organization’s president and chief executive, Barry Melancon, downplays the dispute with the small practitioners’ organization. He calls the push into accounting by American Express and other nationally known financial services firms “not a new issue,” adding that there’s not a lot the trade group can or ought to do to prevent a market-driven trend. As companies broaden their services to provide comprehensive financial advice, they will inevitably get into tax preparation

Still, at least one accountant, James F. Preston of Cutchogue, N.Y., who calls Mr. Kessler “the father of financial planning for CPAs,” feels a bit betrayed. “I personally feel it was a breach of the fiduciary trust that you place with the chairman of the AICPA.” Mr. Preston, however, sees the writing on the wall. He says he is negotiating to join a larger accounting firm, H.D. Vest Inc. in Dallas, the better to compete with the likes of American Express.