I really enjoy surfing in Southern California. It’s a challenging, beautiful, highly addictive sport that really helps me clear my head. And it’s a great living laboratory of the Pareto Principle at work. No matter what the conditions are on the water, the same 20 percent of the surfers seem to be catching 80 percent of the waves.
What’s their secret? They’re not necessarily better surfers than the rest of us. But they have a knack for putting themselves in the best possible position to catch the optimal waves at the optimal time.
The accounting profession can be a lot like the wave-riding community. Everyone is smart, motivated and passionate about what they do. But a small group of accounting partners seems to be making a disproportionate share of the money. By the way, research shows you don’t have to be a partner at a Big Four or large regional firm to be earning a seven-figure net income.
How do they do it? One common thread is that the highest-earning CPAs have made a commitment to lifelong learning. They read a ton. They listen to relevant podcasts. They network all the time. They stay current on all the news and trends affecting our profession. They never stop challenging themselves. And for reasons like these, they’re always ready to pounce when an opportunity breaks their way. For starters, the highest-earning CPAs make time in their schedule to work on their business instead of spending every waking hour in their businesses.
More clients and more billable hours is not your goal
Here’s something important I’ve learned. It’s not necessarily about getting tons of new clients; it’s about creating a vision of what you want your practice to look like. It’s not about cranking out more hours and doing more work; it’s about clarifying your ideal vision for your practice. How many clients do you really want to serve? What do you enjoy doing with your clients? How many employees do you ideally want? What is your net income? What does your ideal work day look like?
I find it helpful to answer those questions by looking three years into the future and then reverse-engineering the responses. By going through this simple exercise, you may come up with a vision statement like this: “Become the most trusted advisor to my best clients by taking a consultative role with a limited number of families that I enjoy serving the most.”
“What? I can’t afford to take two days off for an offsite retreat. I’ll fall too far behind and sacrifice too many billable hours." Does this sound like you? If so, then your billing structure is flawed and you have a self-imposed bandwidth problem.
Be a solution provider, not a technician
Like attorneys and other professionals, CPAs often fall into jargon-filled technical discussions when all a client wants to know is that you solved their problem. Your clients trust you. They assume you’re technically competent and very good at what you do. They don’t need the details about how you do it. If you just came out of open-heart surgery, do you really want to hear all the bloody details about the procedures you underwent? No. You want your doctor to tell you that you did great, that your prognosis is good. Top docs understand this -- and so do the highest-earning CPAs.
They also understand the importance of framing a client discussion. For example, let’s say your client (a couple) has a concentrated stock position with more than 75 percent of their net worth tied up in a single stock. You can discuss the ramifications of short- and long-term gains if they sell the stock. You can explain the nuances of collars and options to hedge their positions. But when you get too technical, they’re not going to be impressed; they’re likely to tune you out.
A smarter approach is to frame the discussion in terms your client can understand. Ask them if they are OK with having such a large percentage of their net worth of $10 million in just one company. If they say they are, then explain to them what could happen if that stock was Snapchat — their $10 million net from a year ago would be worthy about $2 million today. Now ask them to imagine what would have happened to their wealth if that one stock they held was MCI WorldCom. Ouch! Their $10 million would be worth essentially nothing.
A CPA friend of mine recently counseled a family to adjust their heavily concentrated stock position. That stock ultimately went to zero, which would have wiped them out financially. Had she not intervened and illustrated their downside exposure in terms they could relate to, then the family would be in deep financial trouble. It all comes down to framing:
- Asking the right questions;
- Triggering a reaction in your client;
- Being a consultative advisor, not a technician; and,
- Showing concrete examples of what could happen.
From CPA to family CFO
Taking on a truly consultative role starts with really getting to know your client. Do you know their values, their goals and the most important people in their lives? On the financial side, do you know about all the assets they have, their current income, their projected future income and who their other advisors are? Do you know who their insurance agent is? Do you know who their trust and estate attorney is? How about their financial planner, financial advisor or private client lawyer? I’m not recommending changes per se. I just want to know who their team of advisors is.
You need to know about your client’s personal interests and passions too. Are they charitably inclined? What causes are important to them? How important is their community to them? What’s an ideal weekend or vacation for them?
You also need to know how collaborative each client wants your relationship with them to be. Some clients have engineering or scientific backgrounds and are really curious about how the comprehensive wealth advisory process works. They’ll want to have frequent meetings with you and maybe bounce some ideas off you. Other clients just want to know you have their back financially speaking. In many ways you’re like their dentist. They want as little contact with you as humanly possible. They just want an annual or semi-annual checkup with you and if there are any major financial problems they need to address.
By asking these kinds of questions — and distilling the client’s answers — you’ve now shifted into a much different better position to make a significant positive impact on your client’s overall financial picture.
You'll then need to look at your bench of talent. (I talk more about this in my book, "
You have to know the names of good estate attorneys or high-end insurance specialists or business M&A attorneys (if the client is selling a business). Your job is to build your expert network by grabbing a cup of coffee with experts in these specialized areas and assessing the following:
- Their core competencies. Are they technically proficient?
- Their chemistry. Is this someone that you and your clients would really want to work closely with? Would your clients be receptive to them?
- Their willingness to work with you, even in situations which could result in them not getting a client.
Again, partners who are making over $1 million in net income every year aren't necessarily working at the Big Four and large regional firms. What are they doing and how are they doing it? What are they worried about? What are their challenges? How are they addressing them? How are they charging? How is the business flowing to them?
If you want to be riding the wave of success, you need to learn from the best and emulate them.
