How to compare financial service companies

What are the key differences between your bank and its major competitors? What about your insurance company, payroll service provider or investment company?  Would one of them offer you a better deal if you had specific information to make that request? The financial services industry is fiercely competitive and each firm is impressively skilled in promoting its own services. It’s no surprise that you’ve heard about the advantages that your provider offers. But it is also no surprise that the best deals available are often not as aggressively promoted. It is no accident that the financial services industry comprises 20% of the US gross product but contributes about 50% of our collective gross profits. How do you obtain an independent fair evaluation comparing the offerings and the strengths and weaknesses of multiple providers? How does a small business CPA fit into the process?

Get unconflicted advice

An independent CPA is not paid to promote the services offered by any financial service company but typically works with many of these firms in the day-to-day work of providing services to clients. It is impossible for any one person to know every detail of every provider in the financial services field, there is a good chance that your independent CPA knows more about a wider range of practical “nuts and bolts” issues related to financial service providers than anyone else in these markets. More importantly, that compiled information about financial service providers is not biased in favor of those who pay compensation to the adviser. In our field the term for this type of advice is “unconflicted”. Keep in mind that some financial advisers are not required to provide unconflicted advice.  CPAs who represent a financial services company must notify you of this fact in the written engagement agreement under the rules  the relatively new Statement on Standards in Personal Financial Planning Services and Code of Professional Conduct.

A multidisciplinary approach

In today’s world we can expect every single decision we make to have impact on others. The choice of a payroll service provider, for example, will affect the tax reporting of employees and independent contractors. A weak choice can put you among the 30% of employers who have faced tax penalties for mishandling of required wage tax reporting.  The choice of bank will affect the amount of work you have in bookkeeping and the choice of investment firms will ultimately impact the amount of money that your employees accumulate for retirement. A CPA works with multiple areas of practice can help explain how the specific parts come together. A bank might offer a great deal for checking, for example, but its lack of availability to integrate with low cost credit card processing can spoil the deal. The only way to know this in advance is to speak with an adviser who knows both how these systems work together.

Market specialization

The closer an independent CPA works to your market segment, the more practical the advice is likely to be. By “market segment” in this case I mean industry, location, size of firm. Each of these factors plays and important role in the selection of financial service providers. It might not be possible to find a CPA who specifically focuses on flower shops in the Main Line with revenue between $100,000 and $500,000, for example. But you can find one who specializes in sole proprietorships and start-ups in your local area. When the focus is on online providers and remote services (like accounting, payroll, and tax services) then the location of the adviser and provider may not be important. In these cases expertise in the subject matter is far more important and it may make more sense to use a CPA who is an expert in working with remote service providers.


Does it pay off to pay extra for an independent advice in selecting a financial service provider? It depends on the price you pay for the evaluation compared to what’s at stake in the decision. In my case I provide a flat fee consultation for $100 that may be used to provide a second opinion or comparative evaluation for small business service contracts (although some could be higher). In most cases that cost of this service is recouped many times over on the obvious savings/benefits of choosing a better financial services provider. The calculation or estimate of comparative savings should, in my opinion, be an integral part of the adviser’s written report associated with this type of engagement. Done properly, there isn’t any guesswork that the effort to obtain independent advice on selection of financial service providers is a profitable move for any business.

What is at stake?

Every year I see similar firms that pay thousands more than others for substantially identical services for 401(k)s, bank loans, insurance and accounting services. More disturbing, I see provider contracts that are not in compliance with current law and I often come across major weaknesses in the way that their financial service contacts are designed. On top of that, I see business owners who make comparisons on an “apples to oranges” basis or who plainly misunderstand some of the details in today’s complex world of financial services. Finally, in this age of rapidly evolving technology and legal requirements, the chances are that any service contract that is more than a couple of years old is now obsolete and needs to be updated for better performance and compliance. It pays to go through a revaluation process of financial services every couple of years.

All of this leads me to the conclusion that one of the smartest moves a business owner can make is to hire independent professional help whenever choosing or reviewing a financial service provider. The CPA does not need to be the decision maker but can provide valuable additional information that will almost certainly lead to a smarter and more profitable decision. The alternative is to be swayed by the most expertly designed advertising and sales pitch of financial service industry firms that happen to cross your path.


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