By emphasizing entrepreneurial values within a wealth management context, Michael Tate, founder of TPBS Capital Management in Sacramento, California, is helping to build a successful firm that has expanded far beyond its original accountancy roots.
Tate's own values are entrepreneurial in nature, inherited from his father, who founded the accounting firm that is the parent of TPBS Capital Management. Tate's father came from a blue-collar family and placed great emphasis on entrepreneurial focus in order to provide greater personal and professional freedom. Michael Tate has carried that perspective even further, not only building his own business but working with others who have similar values. Thus his firm focuses on serving successful businesspeople, as well as other accounting firms, by offering comprehensive wealth management—a process that ties investors' wealth together with their values to help accomplish key goals and realize dreams.
In addition to building a wealth management effort, Tate has sought to find partners who share his vision of transitioning from accounting to wealth management. "We understand the entrepreneurial impulse and the personal and business growth that it supports," Tate explains. "It's one reason we have been able to communicate not only with clients, but also with founders and practitioners at other CPA firms."
With $100 million under management after only a few years' time, the approach is obviously working. The success of the wealth management emphasis is allowing the firm to increasingly reach out to local and national CPA firms that Tate has targeted for mutual business expansion. Tate has a success story to offer CPAs: His own firm's growth is now coming entirely from the wealth management side. The partners at the parent firm, including his father, have actually stopped taking on new clients so that Tate can approach other CPA firms without any hint of competitive conflicts of interest.
Tate believes that CPA firms in general have to migrate to other alternatives as accounting is pressured by two separate trends. The first is the general unpopularity of the tax code, which is constantly giving rise to alternative suggestions, from fair taxes to flat taxes and beyond. The second, and more important and immediate trend, is electronic tax preparation using canned software. As software expands and becomes more capable, the need for individual taxpayers to employ accountants for tax purposes will diminish.
According to Tate, accountants are sitting on top of terrific assets in the relationships they have with numerous clients. But they need to unlock these relationships with wealth management and other services above and beyond accounting. Tate's passion for financial services also helps him visualize a different kind of mix between accounting and investment management. "I was always interested in the larger aspect of financial services," he explains. "Even as a young man I knew that the specificity of accounting could be more resource-rich with other services."
That knowledge drove Tate to earn his degree in finance and economics at Saint Mary's College of California. He then worked at an investment firm before returning to his accounting roots and eventually ending up back in Sacramento with his father's firm. "My father's impulse was never with accounting itself, but with the ability to help clients," he says. "When I came to work for the firm, I saw different ways to help. After a while I knew that wealth management would be a key for us."
In 2000, Tate earned the professional credential of certified public accountant. In 2005, he received the Personal Financial Specialist (PFS) designation awarded by the American Institute of Certified Public Accountants Specialization Accreditation Board to those CPAs who have demonstrated their competence and experience in providing tax, estate and financial planning services. He decided to focus exclusively on wealth management when a potential client expressed reservations about placing funds with him because of a fear that Tate would be unavailable during the busy tax season. "That was when I walked into the partners' offices and told them I wanted to concentrate on financial services full time," Tate recalls. "I was willing to give up my accounting practice to do so, and I did."
With his expanded focus on nonaccounting issues, Tate's client base and assets grew quickly. Today, the company's investment philosophy is derived from the tenets of modern portfolio theory, focusing on building individual client portfolios that maximize return for a given level of risk. The firm uses leading asset-class fund manager Dimensional Fund Advisors for its investment solutions.
It was the people at Dimensional who introduced Tate to the California-based wealth management coaching firm CEG Worldwide. "CEG Worldwide's support has been most valuable to us as we've made the leap from accounting to a larger base of services," Tate says. "They are truly a leader in conceptualizing the advantages of the wealth management approach and in helping you integrate it into your current business base. We recommend them to our partners and in general would recommend them to anyone who wants to make a transition into the larger arena of wealth management."
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