Pulling the second lever: Building an integrated advice firm

As I explained in my previous article, there are two levers you can pull to impact your firm’s value (i.e., revenue times multiple). Most CPA firm owners instinctively focus on building revenue, the less powerful lever and underinvest in boosting their multiple. Most have heard countless arguments for integrating tax with financial advisory services. They have sat through conference panels and webinars. They nod when the math is laid out: a coordinated tax-and-wealth firm trades at 2x revenue vs. 1x for traditional practices. The math is not the problem.

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The problem is not having a clear path forward. Agreeing with the argument and actually building it out are two different things. Within a couple of months of having the integration conversation, most owners are back to working the revenue lever they have worked their whole career. It’s the only lever they know how to pull. I know change can be unsettling, but here are three models for introducing financial advisory services into your practice and strengthening your firm’s multiple muscles.

Three paths to a better multiple

There are three proven ways a CPA firm can move beyond the revenue level to start pulling the “multiple” lever: 1. Build the wealth capability internally. 2. Partner with an external wealth firm. 3. Create a joint venture with a wealth partner. On the surface, the three paths look similar (the firm ends up offering integrated tax and wealth service to its clients), but each has important trade-offs.

Let’s compare three important dimensions for each of the three paths:

a. The economics (what the path costs to stand up and what it does to the firm’s multiple). b. The control the firm retains (over hiring, brand and service standards). c. The client experience the path produces.

Option 1: Build: hire internally and set it up yourself

Building internally means hiring advisors directly, registering the firm or a subsidiary as an investment advisor, and setting up a wealth practice under the firm’s own roof.

• Economics. The build option offers the strongest multiple impact of the three paths — the firm captures the full fee stream and a buyer sees no partner dependencies. All good. But this option is also the most expensive and slowest to get running well; the multi-year operating investment is the part most owners underestimate going in.
• Control is highest under the build option. Here the firm picks the people, sets the standards, and owns the brand. However, control comes at the cost of real capital and partner attention exactly when client revenue from the wealth side is still ramping up.
• Client experience is the most cohesive under the build option — assuming the hiring is right. When hiring is wrong, your firm could spend two years and seven figures running a parallel practice under one roof.

Fit: The build option is best for larger firms with the capital, the partner time, and the appetite for a multi-year operating investment.

Option 2: Partner: external referrals with a wealth firm

Partnering externally is the lightest path: a referral relationship with one or more wealth firms, often with shared service standards, mutual client introductions, and informal coordination on complex households.

• Economics: Partnering requires the lowest capital outlay; the firm can begin partnering within weeks and pick up incremental revenue through referrals or revenue share. The catch is that impact on your firm’s multiple is the smallest of the three paths and often negligible. Buyers know the difference between a real integrated capability and a referral relationship with branding, and they price their offers accordingly.
• Control: This is the lowest of the three paths under the referral model. The wealth firm runs on its own service standards, hires its own people, and answers to its own economics. Coordination depends on goodwill, and goodwill is brittle the first time either side gets busy or hires someone that the other firm would not have.
• Client experience: This is weakest under the referral model. Two firms, two systems, two engagement letters. A complex client — the one most likely to be a marquee referral source — is also the one most likely to notice the gaps in your offering.

Fit: Partnering with a wealth firm is best for smaller firms that have neither the capital to build nor the appetite for a deeper structural arrangement. For most firms, this is the path that most resembles integration without delivering any of it.

Option 3: Joint venture: the path most firms miss

In its most aligned form, a joint venture is a mutual ownership structure. Here the CPA firm takes an equity stake in the wealth firm, and the wealth firm takes an equity stake in the CPA firm. Two firms, two identities, two operating teams, joined by equity rather than being merged into a new entity.

• Economics: Each firm participates in the other’s growth — the CPA partners share in the wealth side (typically the faster-growing of the two over time), and the wealth firm shares in the steady cash flow and client base of the CPA firm. The impact on your firm’s multiple often runs much closer to the build option than to the partnering option. Buyers who underwrite either firm see real, equity-backed integration, not a referral relationship with branding. The trade-off is that no party captures the full fee stream on the other side’s business, and the equity swap itself must be valued and structured carefully on the way in.
• Control. Each firm retains operating control of its own house. The integration runs through board seats, equity rights and a shared service model — not through the staffing and operations of a separate JV entity. The CPA firm gets a real wealth capability without building one. The wealth firm gets the CPA channel without competing for it. When done well, cross-ownership is the alignment mechanism: Each side is literally invested in the other’s success on every client. Done poorly, however, the two firms can drift apart strategically, and unwinding cross-ownership is harder than dissolving a single-entity JV.
• Client experience: Under the JV model, the client experience typically rivals a successful internal build, but it arrives a year or two sooner. Because each firm retains its own brand and operating team, clients get a clear answer about who does what — tax stays with the CPA firm, wealth sits with the partner — and clients experience the benefits of integration as their existing relationship deepens rather than moving to a separate firm.

Fit: The joint venture model is best for midsized CPA firms with real client complexity, paired with a wealth partner whose values, time horizon and service philosophy genuinely align with the firm’s own.

The reason joint ventures tend to be utilized less often than the build or partnering model has to do more with familiarity than with merit. Building is what large firms do. Partnering is what small firms do. The joint venture is the option that requires an owner to think about their firm in a different shape than the profession defaults to using. Firms that do joint ventures well have an advantage their peers will spend years trying to replicate.

When deciding to pull the multiple lever, CPA accounting firms must decide whether they will retain their position as one of the two advisory relationships their clients keep for the next 20 years, or whether that role will consolidate somewhere else.

That decision does not announce itself. It compounds quietly, one client and one year at a time. By the time it surfaces in a sale or succession conversation, the window in which the firm could have changed its trajectory has usually closed. The firms that recognize that window while it is still open will be the ones the market eventually pays a different multiple for.

The rest will remain stuck at 1x.