Until not long ago, life for a CPA in public practice seemed so much more predictable: You would go to work for a firm and get your two years' experience. In five to seven years you would make manager, and you would be a partner in 10 to 12 years. It was the three-lane highway of professional success.

You did your work, you got paid. Destination: Your client's best interest.

Things have changed, of course. The CPA Vision Project is pointing out new vistas, identifying an increasing panoply of new services and products CPAs can offer. Part of your job now is to decide whether to offer them, how to offer them and how to charge for offering them. Your three-lane highway has grown into a wide freeway with all sorts of converging lanes, check points and road signs.

Soon commissions will be thrown into the mix. Now you have got even more route choosing to do, and you have to choose very carefully.

"You can't predict your track as easily," said CalCPA Executive Director Jim Kurtz. "But you can be facile in converting a change environment to your benefit."

Accomplishing this conversion means making choices. Senate Bill 1289's passage (the new Sec. 5061 of the California Business and Professions Code), allowing CPAs to receive commissions in limited circumstances, has presented CPAs with a tempting, potentially lucrative fee alternative.

Will your firm take advantage of this alternative? A "Yes" answer will send you on a long course filled with more decision-making and preparation of your firm and your clients. Answering "No" does not mean that you have to leave money on the table. But it may well mean you will have to make adjustments in your practice to stay profitable.

Getting to Yes on Commissions
Should you merge into the commissions lane? CAMICO Mutual Insurance Company is working on a "decision tree" of factors CPAs should consider when making this difficult decision. It will be available on the company's Web site, www.CAMICO.com. In the meantime, here are some questions CalCPA and CAMICO recommend that you ask yourself:

1. Would working on a commission basis be in our clients' best interest?
2. If so, what additional services and products do I/my firm want to provide?
3. If not, how can I/my firm still realize the income potential that commissions services and products provide?
4. Do I/my partners have the appropriate education and licenses?
5. If we go with commission services and products, how will we protect our reputation for objectivity?
6. Do I/does my firm have adequate liability coverage?

"We do a lot of estate planning, and in recent years we have observed that there are a number of creative, esoteric estate planning strategies involving the use of insurance that are very tax-advantaged, and that could be of tremendous benefit to our clients," said Ward Bukofsky, managing partner, whose partners soon realized that as CPAs their firm was cut out of the revenue stream these services were giving other professionals.

"We also, through the insurance professionals that we worked with, noticed how much revenue there was in those strategies. So we became acutely aware of the revenue potential, as well as aware of the potential benefits for our clients," he said.

To the partners of Braverman, Codron & Co., entering the commissions arena seems like a win-win situation. They have formed a separate entity in anticipation of expanding their practice in this area.

"We became strongly of the opinion that our clients are best served if we the CPAs are at the center of their financial planning process," Bukofsky explained. "We are able to integrate all the various sub-disciplines and issues - tax, investments, estate planning, insurance - that are factors of their financial life.

And end up with the compensation that could go to the CPA.

Commissions Not the Only Road to Riches
But Joel Framson, owner/partner at Glowacki Framson Financial Advisors in Los Angeles, believes CPAs can get that compensation without working on a commission basis. Framson has provided financial planning for 14 years on a fee-only basis.

"The huge difference between commission and non-commission is that when you are advising for an annual fee as opposed to taking a commission, you are getting paid as much to advise your client not to do something as much as to do something," Framson said. "And sometimes, not doing something is the better thing for them to do.

"But when you are getting paid on a transactional basis, if you tell your client to do nothing, you're getting paid nothing. Now, as ethical as CPAs are, if they're going to get into the business of making money by taking commissions, are they going to be as likely to say, 'Do nothing' as they are to say, 'Buy something?' I think there is a conflict there."

Bukofsky says some clients will not benefit from a CPA's commission-based service.

"You have to know your client," he said. "There may be some clients for whom commission-based work is just not appropriate. It always has to be a choice for the client."

Bukofsky's firm will provide its clients a variety of payment options, of which a commission is just one.

Referral Fee Does Not Equal Commission
A corollary -- but crucial -- piece of information to keep in mind is that a referral fee is not a commission. You may have received flashy promotions or friendly phone calls recently from agencies and brokers who promise you a fat fee for your client list.

"A lot of bad information is being spread in the marketplace, some of it by large, out-of-state brokerage houses that aren't aware of California rules," said Greg Newington, chief of the California Board of Accountancy's enforcement division. "Especially in the area of referral fees. Some of the large brokerage houses are soliciting client lists and telling CPA practitioners that it's OK."

Stop perking your ears to these siren songs; the CBA clearly states in its regulations that "the commission is to be paid for professional services and that a fee or commission cannot be accepted solely for the referral of the client to the products or services of a third party."

Newington says that rule is not likely to change anytime soon.

"There appears to be no immediate sentiment in going toward the acceptance of referral fees," he confirmed. "That issue was discussed specifically when the board reviewed its position on the commission legislation. They were generally outspoken in opposition to referral fees."

Newington acknowledges that the distinction between a disallowed referral fee and a legally obtained commission will be difficult to distinguish at times.

"It's a very fine line, and kind of blurry," he said. "How much time you need to spend with your client is not clearly articulated in the statute or regulations."

Indeed, the issue of "professional services," as stated in the regulation, troubles many licensees, who are trying to ferret out exactly what that means.

"You want the easiest way to define it?" asked Newington. "You need to earn your compensation in this environment. If you keep that in mind, you will not only serve your clients well, but you will be much more likely to fall on the compliance side of the current statute and regulations."

What about Training and Licensure?
The partners at Braverman, Codron & Co. had answered the first and second questions we posed: They felt that adding commissions services and products to their traditional offerings would definitely benefit their clients. And they had decided what products and services to add.

Next they tackled Question 3. They realized that "if CPAs are best suited to be at the center of their clients' financial lives, they have to acquire the training, knowledge and experience in all of those areas in order to be effective team leaders for their clients," Bukofsky said.

In other words, Braverman, Codron & Co.'s partners had to educate and license themselves in the service areas they proposed to bring on board. Your firm will have to do the same. Will you offer insurance? Investment products? Real estate consulting? Better start studying up.

A quick trip through your browser to the state Department of Insurance, www.insurance.ca.gov, and the state Department of Real Estate, www.dre.cahwnet.gov, will give you an overview of licensure requirements in those sectors. For information on how to become a registered investment adviser or a securities broker-dealer, call your state Department of Corporations' Securities Regulation Division. Bukofsky's firm saw the need for this type of footwork and knowledge early on.

"We formed alliances with insurance and investment professionals, and two partners now have both insurance and securities licenses. And there'll probably be a third," said Bukofsky, who himself obtained licenses to broker insurance and securities products. He stresses it is important for firms to set up strategic alliances with outside professionals and firms that they have thoroughly researched.

"You need to build up a core understanding and a core competency," said Bukofsky. "But you also have to have alliances with outside professionals who have much more in-depth knowledge and understanding of each of these detailed service and product areas. But because our clients are ultimately going to look to us and say, 'Does this make sense?' we need to have core competencies in these areas."

The Twin Grails: Independence and Objectivity
The next -- and perhaps most hotly debated -- question is how to protect your reputation for objectivity if you offer services and products on a commission basis.

Mitch Freedman, a Sherman Oaks-based CPA and longtime fee-only financial adviser, says CPAs will need to step carefully.

"Those CPAs who do decide to offer products and services on a commission basis are going to have to walk a very fine line in terms of helping to preserve the public's image of CPAs and the CPA's core values," he said. "And it's going to be a challenge to be able to do that. They might be able to compete more readily in the marketplace with alternative fee arrangements, but the long-term effects on their individual practices and on the profession in general remain to be seen."

Framson believes the effect will likely be negative.

"I think commissions will make things very confusing for CPA clients and probably make things more difficult for practitioners," said Framson. "Up until now, the public has come to know CPAs as providing independent, objective services. They know that historically the only compensation CPAs received came directly from the clients.

"I think that once that changes, clients are in general going to view CPAs with more skepticism - just as they view the other professions where they know the practitioners are getting paid by somebody else. I see it as a potential problem for the image of the profession."

But the partners at Braverman, Codron & Co. believe this does not have to be the case. Their approach: Look first to process, then to product.

"I know the reason a lot of people don't believe you should get involved in commissions is because they think you'll ultimately impair your objectivity," Bukofsky acknowledged. "I don't believe that. You're not going to jeopardize a 20-year client relationship to get a $10,000 commission.

"Before we ever talk about a product, whether it's load, no-load, variable life insurance, whatever, we're first looking at the strategies, the process, the goals of the client. It's process first. Process and strategy. Once we come up with an approach, then we look at the products to accomplish that. And that may well be no-load."

David George, a Yorba Linda-based CPA and registered investment adviser, says it is critical for firms that work on a commission basis to be sure to offer access to a wide range of products and services their clients can choose from.

"CPAs should be careful that their state of mind is not jeopardized by relationships and alliances they may have entered into and as a result have too few choices for a client to make," said George, who heads a CalCPA commissions feasibility task force.

"If they've entered into an alliance where clients' choices are limited, the tendency might be for the CPA to make a choice from that limited universe, as opposed to other alternatives for the client," he said.

Newington concurs, saying he expects regulatory and civil litigation as a result of commission-based services by CPAs, "because it's a brand-new field."

CalCPA's Kurtz says it is a matter of where you charge those commissions. He is concerned that entering the commissions arena via the financial planning door will unduly expose CPAs during this time of market turbulence: "If you don't think that the stock market is going to undergo a huge correction, you're out of your brain," he said. "And if you think your clients aren't going to sue you when they take a hit, you're out of your brain just as much. Why put your finger in that pencil grinder?"

Liability Coverage Is Crucial
Let us say your firm has gone over all of the issues above (and a few more besides), and has decided to charge a commission for certain products and services. Before you turn in that direction, make a pit stop into your insurance carrier's office and find out if your firm's coverage extends to commission-based activities.

"We have insurance coverage through the broker-dealer that we're licensed with for securities, and we also have an insurance policy for our insurance license," Bukofsky noted about Braverman, Codron & Co. "We're looking into CAMICO to see if we need to modify our office's insurance. And we're also given indemnity by the strategic alliances we're working with. I anticipate it will be a triple defense."

CAMICO Mutual Insurance Company covers commission-based activities and services by CPAs.

"As long as state law and regulations allow commissions, CAMICO will cover that area," said Ron Klein, vice president of claims and information systems. "For other carriers, there's no general answer and CPAs must inquire."

Commissions vs. Alternative Fee Arrangements
There are certainly plenty of reasons to say "No" to offering commission-based products and services.

"I always feel that it is a competitive advantage in the marketplace to be able to say to a client, 'I am fee-only and therefore I am unbiased. I don't care what product you buy as long as it fits your plan and will help you to meet your financial goals,' " said Freedman.

Framson feels CPAs' fiduciary duty to their clients should keep them away from commissions.

"Most of us as CPAs are actually fiduciaries to our clients," he said. "It's more explicit when it's in an ERISA context, but also on an individual basis. Can we meet our fiduciary obligations by being commission-based? I don't want to answer that question. But I do know that as a fiduciary, you have to have your clients' highest and best interest in mind. And you're potentially liable to your client for a breach of fiduciary duty. I don't think that's been addressed enough in regard to switching from an adviser-based role to a commission-based role."

You may feel this way, too. The idea of accepting commissions may give you hives. But so might the idea of giving up the potential revenue. Here is the deal: it does not have to work that way.

"One option is to stay out of the commissions area, but give the services," said Kurtz. "You need to figure out how to do the fee the right way."

Kurtz believes CPAs who want growth without the potential headaches of commissions must start thinking of their services in a more conceptual manner and charge in accordance with their true value to their clients. In other words, if your firm has not already done so, it should consider instituting a fee arrangement that is not based on the standard time-and-service model, Kurtz suggests. He urges CPAs to create their own compensation model and not feel bound to choose between time-and-service or commissions.

Kurtz believes that if CPAs expand their offerings from transactional audit services to assurances services and move from working exclusively in the arena of informational reliability and into informational relevance, they can charge for their services in a much different -- and more lucrative -- manner.

In fact, Kurtz believes the issue of relevance in business is where the money is for CPAs now and in the future - mining knowledge, divining its relevance to clients and transmitting that condensed information in a way that adds value to their businesses and services is what CPAs should do.

And, he says, for this they should be compensated handsomely.

"Commissions are a flyspeck on the windshield of progress for the profession, when you realize the durable and portable value of relevancy services such as consulting," he said. "What is the evolution of tax into relevance? Financial planning. Relevance is the key commodity."

Kurtz stresses that these new services are in no way divorced from the traditional.

"That's why commissions is probably the wrong place to enter," he said. "Why? Because you want to maintain your relevance. If you devalue your relevance into 'Go buy that,' you're not worth nearly as much."

Kurtz says that deciding to offer commission-based services and products is not necessarily a wrong decision.

"But you'd better know what you're doing," he warned. "Because otherwise, you'll get wrapped up in somebody else's scheme to get to your clients. The CPA profession must carve its own place. Don't be told where to stand in this arena. You pick your own spot - and it ought to be the high ground."

April Karys is a staff writer and editor for Outlook Magazine at the California Society of CPAs.