It’s already a big hill of beans

An accounting firm in New York believes it has cracked the code on offering clients money management without having to share revenues or give up client control to a bank or brokerage.

Starting from scratch 16 months ago, M.R. Weiser & Co. LLP, which has 53 partners, has attracted $260 million — $100 million of which came in the first two months of this year — by promoting its new financial planning and investment advice services through partners specializing in personal tax, estate and trust accounts.

Indeed, managing partner Stanley Nasberg predicts the business will be supervising $1 billion within its third year. That could generate up to $7.5 million in annual fees, based on the unit’s maximum 0.75% advisory fee.

Weiser has captured these assets by hiring someone to oversee its management unit. It’s hardly the first accounting firm to offer money management in-house, but its success can be a case study for how this industry will shake out.

The accounting industry is desperate to offer money management to compete with brokers and banks, but because most firms lack the wherewithal or the moxie to offer it on their own, they end up farming it out to their competitors.

Firms like Weiser keep trying because they believe that they gain intimate knowledge of clients’ finances by doing their taxes, and are thus a natural to provide money management.

“We have achieved this by picking the very lowest of hanging fruit,” says Mr. Nasberg about his firm’s success. “We just have to go up that tree.”

Like most accounting firms, Weiser doesn’t have authority to trade customer accounts. It draws up asset-allocation plans and recommends investments in a mix of mutual funds — for the less affluent — and two dozen separate account managers for wealthier clients.

When Weiser began looking to offer investment advice two years ago, it too expected to form an alliance with a brokerage or bank.

“That seemed to be the easiest route, rather than try to take on this business that we as accountants had never run before,” says Lisa Osofsky, who helped develop the business plan and is chairman and CEO of Weiser Advisory Services LLC.

Rather than trying to take on the job herself, she recruited Lawrence Busch, 35, as president and chief operating officer of the new unit.

Ernst & Young veteran

Educated in accounting, Mr. Busch gained investment experience as an analyst in the investment counseling unit of Ernst & Young LLP in the early 1990s and later as director of investment research at Clarfeld & Co., another middle market New York accountancy.

“At Weiser,” says Mr. Busch, “I’ve taken my knowledge of the investment business and how accounting firms operate, and partnered with an accounting firm that has a bigger client base, yet not so big that you get swallowed up and financial services becomes a low priority.”

Getting Mr. Busch wasn’t cheap: he owns 35% of the advisory unit, but executives believe the deal was worth it — they had hoped to garner just $100 million in the first year.

“We spoke to a number of banks and brokerage houses, but in every case we would lose control over our clients,” says Mr. Nasberg.

The biggest issue for accounting firms is liability. If clients get hurt, they strike back harder because they assume that a lot of independent thought is given to advice. By hooking up with Mr. Busch, M.R. Weiser’s accountants gained the control and confidence they needed to back the program.

“Weiser’s success demonstrates why everybody is coveting the accounting market,” says Mark Tibergien, a principal with Moss Adams LLP, a Seattle financial services consultancy and accounting firm.

“They are in a unique position early on to recognize the opportunities for offering financial advice. When you combine that with the trust and relationship they have with clients, it makes a very powerful combination.”