Capital Professional Advisors Combines Traditional and Non-Traditional Investment Products in its Fee-Based Platform.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Aug. 21, 2000

"Completely integrated investment solution" is Capital's goal

in helping its members - 22 mature, middle-market accounting

firms - build their financial advice businesses

Certified Public Accountants (CPAs) already have the ear and a great deal of private financial information about their clients. Increasingly, their clients are turning to them for advice on their investments, particularly because mutual funds and other investment vehicles have significant tax implications. A 1999 Worth Magazine survey, for example, lists CPAs among the nation's top advisors.

Capital Professional Advisors, Inc., founded by 22 mature, middle-market accounting firms and led by President and COO Doug Wright, announced several initiatives that will enable CPAs to offer their clients a completely integrated "solution set," integrating the best investments into a single portfolio. Capital's 22 member firms represent some $650 million in accounting revenue and 250 offices nationwide that serve approximately 300,000 clients.

"You could call our approach a `hybrid,' because perhaps for the first time, clients have access to the best investment solutions, as opposed to being forced to use either one type of product or another," Wright said. Clients of the CPA firms associated with Capital - regardless of the size of their portfolio - will have access to a private money manager, as well as Exchange-Traded Funds (ETFs) and more traditional investment vehicles such as mutual funds, stocks and bonds. "Each of these products has its own fundamental attraction - one of these products is not better than the other - each is best for a specific application. But unfortunately these products are often `siloed' in other firms," he said.

One of Capital's product innovations is the ability to offer privately managed accounts to all investors through a strategic partnership with FundQuest, Incorporated, a registered investment advisor and leader in designing, managing, and servicing web-based investment advisory programs for financial intermediaries. Investors with less than $250,000 in assets traditionally don't have this option; however, Capital was able to offer private money management to clients of its member firms because of the combined buying power represented by the 22 firms. Minimum client account size has been radically reduced as a result of highly innovative developments at FundQuest in the area of operational support. With these innovations, the expertise of institutional-quality private account managers can be offered to clients with accounts as small as $45,000.

Other products on Capital's fee-based platform are Exchange-Traded Index Funds, "ETFs" or "I-shares." Like index funds, ETFs aim to match the performance of a market benchmark, and there are several varieties - growth, value, small-cap, mid-cap, international, etc. Because the cost basis is determined at the point of purchase, however, ETF holders don't have to deal with the unrealized capital gain problem inherent with most many index funds and mutual funds. And, because they're considered securities, ETFs offer many of the same tax-management capabilities found in individual stocks. Plus, ETFs are available on a lower cost basis than mutual funds.

Capital enables its members to offer investment products and services under their own brands. In the meantime, Capital provides the integrated support and expertise firms need to build platforms and service their clients. "We're working behind the scenes so that our member firms can establish their credibility as valued financial advisors," Wright said. He added that Capital will announce the addition of several more products and services in its fee-based platform before the end of the year.

Capital Professional Advisors, Inc., is a membership organization established in 1999 to help the nation's mature, middle-market accounting firms expand their service array and take their businesses to a new level. Capital's professional staff and exclusive relationships with top drawer financial services firms enable it to offer a diverse range of products and service platforms that generally are unavailable to single accounting firms. The comprehensive array of services includes products, technology, training, and support for firms that are diversifying into insurance, investment products and other financial services.