RIAs and CPAs Are Rethinking Partnerships — Here's What's Changing

RIAs are done pretending they can handle tax planning in-house. The new model: partner with CPAs, share revenue, and skip the headache of hiring tax staff.

Lisa Kirchenbauer runs Omega Wealth Management in Arlington, Virginia. Her firm works with $10-50M clients who need "expert/coordinated tax planning." For years, they referred clients to CPAs and coordinated as needed. One CPA firm handles maybe 25 mutual clients. Result: "virtually no referrals over many years."

That's changing. Omega is now exploring revenue-sharing deals where money flows both ways. The RIA sends tax clients to the CPA. The CPA sends wealth clients to the RIA. Everyone wins. More importantly, everyone gets paid.

Why now? Client demand. High-net-worth investors want one team handling investments and taxes together, not two separate firms that email each other once a year. Building tax capabilities in-house is expensive and slow. Partnering is faster.

The numbers back this up. Financial Planning reports 1 in 6 RIAs now offer tax prep. But it's skewed - firms with $500M+ in assets are twice as likely to use tax software as firms under $100M. Translation: small firms can't afford it. Mid-size firms are on the fence. Partnerships solve that problem.

Not everyone's going the revenue-sharing route. Crystal McKeon, chief compliance officer at TSA Wealth Management in Houston, keeps it separate.

"We prefer to keep our CPA relationship separate but coordinate tax planning," she says. "We work with the CPAs on the client's plan but do not exchange any funds or formal agreements."

TSA maintains a network of CPAs and matches clients based on complexity - ultra-high-net-worth specialists for the $50M+ crowd, business-owner-focused CPAs for the entrepreneurs, straightforward preparers for W-2 filers. No money changes hands. No contracts. Just referrals and coordination.

That model avoids compliance risk and conflict-of-interest concerns. But it also leaves revenue on the table. If you're sending 25 clients to a CPA firm and getting zero back, you're not really partners.

Then there's the continuity problem. David Demming, founder of Demming Financial Services in Aurora, Ohio, partnered closely with one CPA firm for decades. "Our clients got great service and coordination between firms," he says.

Then the senior partner retired. "The downside is they retired and the new firm [does not have] the same philosophy."

That's the risk of tight partnerships - they're only as strong as the people in them. When key players leave, the whole thing can unravel. Revenue-sharing agreements and formal contracts can help, but cultural alignment matters just as much as the structure.

The big question: why don't RIAs just hire CPAs and do it in-house?

Economics. Tax prep is seasonal, low-margin work that doesn't scale like wealth management. RIAs with $100M AUM can't justify hiring a full-time tax team for 50 clients who need returns filed in April. Firms with $1B+ AUM can - and many do. Everyone else is stuck outsourcing or partnering.

Client expectations are shifting too. Surveys show a sharp increase in investors who want integrated financial services. The "one-stop shop" model is becoming table stakes, especially at higher wealth levels. RIAs that don't offer tax planning lose clients to RIAs that do.

For CPAs, this is a growth opportunity. Wealth management is higher margin than tax prep. A CPA firm with 500 tax clients and zero AUM could add $50M in managed assets through a tight RIA partnership. That's recurring revenue that doesn't disappear after April 15.

The structure matters. Referral fees and revenue-sharing arrangements require careful compliance work. Some states have strict rules around fee-sharing between RIAs and non-RIA entities. Getting it wrong can trigger regulatory scrutiny or worse.

But firms that get it right are seeing real results. Tighter client relationships. Better retention. More referrals. And revenue flowing both ways instead of one.

If you're a CPA with a stable book of high-net-worth tax clients and no wealth management offering, this is your opening. If you're an RIA sending clients to CPAs for free, you're leaving money on the table.

The trend is clear: tax and wealth are converging. The only question is whether you're going to formalize the partnership or keep pretending informal referrals are good enough.