What level of revenue can a CPA firm earn in financial services and how long will it take to get there?
A rule of thumb is that it generally takes about 3-5 years to tap a CPA firm’s full revenue-generating potential in financial services. The quickest type of revenue to generate often is commissions from non-variable insurance and annuity sales. The slowest (but steadiest) revenue stream can be provided from investment advisory fees. Generally, it can take five years or more for CPA firms to capture enough assets under management to generate significant profits from asset-based advisory fees. The AICPA estimates that an average CPA controls about $100 million of assets for every $1 million in annual billings. If a CPA firm can capture half of their clients’ total assets, and earn a fee of 0.50% annually on those assets, the firm’s annual billings could increase by 25%. Add in potential revenue streams from insurance, annuity and investment products and the revenue increase can, in some cases, approach 50% over time.
