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blake oliver is a cpa and the founder and ceo of earmark, an app that offers nasba-approved cpe and irs-approved ce credits for listening to your favorite accounting and tax podcasts. he also co-hosts the accounting podcast, the world’s most popular podcast for accountants. |
you have a lot of advice to offer beyond taxes.
by blake oliver
the holistic guide to wealth management.
“isn’t it ironic? we ignore those who adore us and adore those who ignore us.” – author ellen hopkins
every cpa i know wants to help clients make the best financial decisions. study after study shows cpas are their clients’ most trusted advisors because they have integrity, are prudent, and don’t engage in the hard sell, especially when it comes to financial services.
more: how wealth management has evolved | introducing you to a fulfilling return on relationships | rory henry upends the traditional accounting firm | why now is the time for cpas to embrace wealth management
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most cpas claim to do tax planning. but how can you do proper tax planning without knowing a client’s financial goals? you need to know much more about a client than merely their tax liability. yet that’s often where the accountant’s relationship with their client stops every year. how many people have a great tax guy/tax gal whose only goal is to minimize their client’s tax liability? that’s their job, right?
so, what do they do? they advise their clients to put all their money into retirement accounts that they can’t touch until they’re 65. it seems like a prudent thing to do. but suppose the client wants to retire at age 60 or even 55? you may end up doing them a disservice by optimizing for tax mitigation if you’re not helping them maximize their wealth.
why cpas are reluctant to offer financial planning services
this may surprise you, but cpas are generally not concerned about lacking the technical expertise for financial planning services; they’re more concerned about lacking soft skills. unlike tax or financial statement preparation, financial planning doesn’t have hard and fast rules. there is no gaap or ifrs rule to tell you exactly when a client should retire or how much risk they should be able to handle in their portfolio.
areas such as financial planning, retirement planning and wealth management are much more subjective. so much of it falls under the “it depends” category, making many cpas uncomfortable. people’s long-term financial goals are much more personal than paying taxes, and a lot more emotion is involved. to be a financial planner or wealth advisor, you must have intimate conversations. i realize you may not be comfortable with that. “what do you really want to do with your life?” is not something you typically ask clients when doing an audit or preparing a tax return.
but that’s where huge opportunities exist for our profession. when i say opportunity, i’m not just talking about offering high-margin services. i’m talking about using financial planning as a recruiting and retention advantage because that’s the type of work so many more young people would like to do.
as cpas, we’re used to having conversations around technical topics. the financial planning side is much squishier and more emotional. many clients have negative feelings about their financial situation. it can be a huge source of stress and frustration for them. they may cry in your office. you may find out they have all kinds of debts, and they may think they’re never going to be able to retire. married couples often don’t have the same money values and goals, resulting in awkward conversations. most cpas didn’t study accounting to feel like a marriage counselor.
but maybe we should.
rethinking accounting curriculum and training
as cpas, we haven’t been taught to ask a lot of questions. our accounting curriculum teaches us to always have the answer – that it’s bad to admit you don’t have the answer. we don’t like to admit our ignorance. but in many types of professional services, it’s good to ask a lot of questions. (that’s why i love podcasting; i get paid to ask my guests questions that others are afraid to ask them. it means i get to learn something new every day).
if i had my way, the entire accounting curriculum would be overhauled with less emphasis on memorizing specific rules. the rules are just a google search away – and soon, ai-powered tools will give us answers even faster. you don’t need to memorize all the standard deduction amounts. instead, you just need to know where to look to check if something is incorrect. today, finding the answer through research is easy. it’s important to approach financial planning advice with a critical mindset. this is what is required to provide the best guidance for your clients.
i went to a liberal arts college. i was a music major in college. i didn’t study accounting as an undergrad. i took comparative literature, political science, history, film and even chinese. those courses didn’t make me more employable, but they helped me to think critically and to ask good questions. eventually, i went back to school at night to get an accounting certificate. i could handle the coursework just fine, but i was shocked at how little discussion and debate the instructors tolerated from students. the professor would get frustrated if you questioned an accounting standard. clearly, we weren’t there to question whether gaap made sense; we were just there to learn how to apply it.
this mindset is what’s screwing up accountants. with ai becoming more commonplace, knowing how to ask the right questions will be much more important. that’s what education must do; it must teach us how to ask the right questions. that also means questioning the information that we’re given.
it’s the opposite of how education has been in the trades for hundreds of years in which you’re just memorizing a process. don’t get me wrong. we still need to know how debits and credits work and how financial statements tie together. but i don’t think we should spend time memorizing all these accounting standards and obscure provisions in the tax code that we might never encounter in practice. we’d be better off learning how to get better in touch with our clients’ emotions, fears and personal relationships with money – a relationship that is not always in a good place.
making financial planning services available to more people
we have a tidal wave of boomers retiring. trillions of dollars are set to be transferred to the younger generations over the next several decades. i worry that the next generation is not ready to receive this windfall responsibly. only one-third of the population has a financial advisor, and only two in five have an estate plan. many don’t think they’re wealthy enough for a financial advisor or don’t think they can afford one.
that’s a huge opportunity for cpas. thanks to technology, we can now start offering group financial planning via an affordable subscription. eventually, subscribers will become full clients when they get wealthier, and their lives become more complicated.
examples of “one-to-many” advisory subscription offering
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cpas are uniquely positioned to quarterback the financial lives of their clients
cpas are uniquely qualified to quarterback their clients’ financial lives because they are usually their clients’ most trusted advisor. they have access to all their clients’ financial information. also, accountants are used to working on deadlines and are very good at managing specialists working remotely on behalf of their clients. all these factors position cpas very well in offering financial planning services to their clients.
then, of course, there’s the more reasonable work/life balance that financial advisors enjoy – and that cpas often only dream about. don’t underestimate how important work/life balance is to your recruiting and retention efforts.
bringing the financial planner’s work/life balance to cpas
cpas need shorter, more reasonable hours all year round. period. no amount of money or benefits is going to fix the lack of work/life balance that all too many cpas endure. working seven days a week for three or four straight months every single year of your career is not healthy. it takes its toll on your mental and physical health and relationships. i can’t tell you how many accounting firm partners die within five years of retiring because they’re so mentally and physically burned out.
if we want to retain staff in our firms, we need to eliminate (or do our best to mitigate) busy season hours. the best way to do that is to eliminate billable hours as a performance metric. setting billable hour targets simply incentivized overwork and, often, inefficiency. in contrast, financial advisors usually don’t obsess over timesheets because they don’t bill out their time.
financial advisors know that clients don’t care about how many hours it takes them to create and manage a financial plan for a client. they just want to ensure that the plan is sound and that clients are following it. financial planners do better when their clients do better. and if clients are not doing as well during tough economic times or during down market cycles, then the planner may not earn much. but over the long run, this billing and compensation approach more than equals out.
the human side of advice
personal finances and retirement planning are a big source of stress for many people. it is crucial to know how to talk about these sensitive issues with your clients and how to alleviate their stress and anxiety about money. mastery of soft skills is one area in which traditional financial planners are way ahead of many cpas. but soft skills are quite learnable for accounting professionals. you just have to commit to improving.
for starters, you need to be able to empathize with your client – to put yourself in their shoes. this may not be easy because, as accountants, we enjoy numbers. sometimes we forget that most people don’t enjoy numbers. so, we must think outside of our own experience. it takes training to do this effectively. unfortunately, most undergraduate and graduate-level accounting programs don’t teach students how to think outside their own experience.
fortunately, there are many ways for accountants to learn soft skills outside of traditional accounting education:
- professional development courses: many organizations offer professional development courses specifically designed to help individuals in financial roles improve their communication skills.
- continuing education: many universities and colleges offer continuing education courses in business communication that can be very helpful. these courses may cover topics such as effective written and verbal communication, negotiation skills, and how to handle difficult conversations.
- books and literature: there are numerous books that can help improve communication skills. some recommendations include “difficult conversations: how to discuss what matters most” by douglas stone, bruce patton and sheila hen, and “crucial conversations: tools for talking when stakes are high” by kerry patterson.
- online learning platforms: websites like coursera, udemy, linkedin learning and khan academy offer courses on various aspects of communication. you could look for courses on topics such as conflict resolution, negotiation, public speaking and effective business communication.
- mentoring and coaching: if you can find a mentor who is an experienced accountant with strong communication skills, he or she can provide personalized advice and guidance. alternatively, professional coaches who specialize in communication can also be helpful.
- role play and practice: practice makes perfect. role-playing difficult conversations with a trusted colleague or coach can help you refine your approach and gain confidence.
- mindfulness and stress management techniques: learning how to manage your own stress and emotions can be beneficial when dealing with difficult conversations. consider exploring mindfulness, meditation or other stress management techniques.
remember, effective communication is not just about delivering information; it’s also about listening, understanding and responding to the other person’s concerns. being empathetic and understanding the client’s perspective can go a long way toward making difficult conversations easier.
technology and ai make it easier to serve clients’ financial needs
technology and artificial intelligence (ai) are transforming financial services in several ways:
- automated financial services: robo-advisors, for example, use ai algorithms to offer investment advice to clients. these automated financial advisors make it possible to provide financial services to a wider audience, not just to those who can afford a personal financial advisor. they allow clients to manage their portfolios 24/7 from their smartphones or computers.
- improved data analysis: ai can process and analyze massive amounts of data faster than any human can. this capability enables more comprehensive risk assessment, portfolio management and prediction of market trends. ai can evaluate thousands of investment options based on a client’s risk tolerance and financial goals to create a customized investment strategy.
- financial planning and budgeting tools: ai-driven budgeting tools can analyze a client’s income, spending habits and financial goals to create a personalized financial plan. these tools can also send alerts when a client is about to exceed their budget, helping them to stay on track with their financial goals.
- enhanced customer experience: chatbots and ai-based customer service tools can provide instant responses to client queries, making customer service more efficient. additionally, ai can provide personalized financial advice based on a client’s transaction history and behavior.
the cpa or financial advisor of the future will need a new set of skills and competencies to effectively leverage ai and other technologies. here are some potential characteristics:
- tech-savvy: the advisor of the future will be comfortable with digital technology and ai. they will be able to use advanced financial software, robo-advisors, blockchain, and data analytics tools to offer better services to their clients.
- analytical and strategic thinking: although ai can process and analyze data, the interpretation and strategic use of this data will be a key role of the future advisor. they will need strong analytical skills to understand complex data patterns and to design strategic financial plans.
- client-centered approach: the future advisor will need to focus more on understanding client needs, emotions, and behaviors. with ai taking over routine tasks, advisors will spend more time engaging with clients, understanding their life goals, and providing holistic financial advice.
- continual learning: the fast pace of technological advancement will require the future advisor to be a lifelong learner. they will need to continuously update their knowledge and skills to stay relevant in the evolving financial landscape.
- ethical and responsible: with increasing concerns about data privacy and security, the future advisor will need a strong understanding of ethical issues in ai and data usage. they will also need to ensure the responsible use of ai and respect the privacy of their clients’ data.
conclusion
whether you realize it or not, your clients want you to be their financial planner, not just their tax preparer. they’ve trusted you with their confidential information for years and have shared many of their hopes, dreams and money worries with you. why not take your relationship to the next level? technology has made it easier than ever to make the transition to a comprehensive financial advisor. just work on improving your listening, empathy and soft skills, and you could soon have the practice of your dream, with a much better work-life balance as a result.