wages

mandatory retirement? 4 reasons the firm comes first

by

elderly businessman with hand on door frameand 6 reasons that firms struggle.

by marc rosenberg
retirements & buyouts

at cpa firms, the concept of requiring partners to retire at a certain age has been around for decades. the mandatory requirement policy has its roots in the “one-firm” concept of managing a firm: the interests of the firm should always be more important than the interests of any individual partner.

more on retirement: you want goodwill payments? give proper retirement notice | retirement plan funding? what funding? | compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | if clients leave, do you reduce retirement benefits? | the multiple of compensation method, fully explained | the ins and outs of aav for goodwill | 5 points to consider when paying out goodwill | how to set terms and limits for goodwill payouts | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

why a mandatory retirement policy is good for the firm: read more →

how to transition clients from retiring partners

by

older businessman shaking hands with businesswoman across deskdon’t make this common but potentially expensive error.

by marc rosenberg
retirements & buyouts

i have done extensive polling of firms in recent years on client transition and offer here some of their practices.

the best transition practice of course falls under the category of “the best way to solve a problem is to never let it happen to begin with.”

more on retirement: retirement plan funding? what funding? | vesting can cover part-timers, too | compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | why you’ll get less from your partners in a buyout than you might by selling the whole firm | eat what you kill? then maybe ‘book of business’ is for you | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

said one mp: “the ‘transition’ process should start as soon as the firm gets a client (some start even sooner – on the sale pitch). clients should be assigned a team, including a backup partner and a manager. the client should be told who the team members will be. some call this institutionalizing the clients. if you do this, there is very little else that needs to be done when a partner announces his/her retirement.”

some other points: read more →

you want goodwill payments? give proper retirement notice

by

older man and younger man having meeting at deskno transition – no goodwill.

by marc rosenberg
retirements & buyouts

if there is one takeaway in retirement planning, it would be this: “no transition – no goodwill.” here’s what i mean.

more on retirement: retirement plan funding? what funding? | vesting can cover part-timers, too | compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | if clients leave, do you reduce retirement benefits? | three ways to calculate goodwill payable in partner buyouts, none of them great | eat what you kill? then maybe ‘book of business’ is for you | the ins and outs of aav for goodwill | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

the best of times and the worst of times…

with apologies to charles dickens, who famously opened his classic “a tale of two cities” with the above, here are two real experiences i had regarding transition, one of which was the best example of retiring partner transition i’ve ever seen and one the worst.

read more →

retirement plan funding? what funding?

by

young businessman clipping hedge into dollar signweighing 2 pros… and 6 cons.

by marc rosenberg
retirements & buyouts

ninety-nine percent of all cpa firms’ retirement benefits are unfunded. (this excludes the many instances where firms carry life insurance on partners because it only covers retirement in the case of death).

more on retirement: vesting can cover part-timers, too | retirement vesting: the devil’s in the details | compromise is in order for some goodwill payouts | if clients leave, do you reduce retirement benefits? | why you’ll get less from your partners in a buyout than you might by selling the whole firm | the multiple of compensation method, fully explained | clients leaving? time to reduce retirement benefits | how to set terms and limits for goodwill payouts | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

there are two types of funding:

read more →

tax and accounting firms lengthen hiring spree

by

growth in most segments continues.

bureau of labor statistics for february 2015

the u.s. tax, accounting and bookkeeping industries are among the economy’s bright spots, according to 卡塔尔世界杯常规比赛时间 sources.

here 卡塔尔世界杯常规比赛时间 reports on:

  • current hiring trends in each of the bookkeeping, tax, payroll and cpa segments of the industry.
  • average hourly wages for key segments.
  • typical hours worked per week.
  • and trends concerning women in the accounting workforce.

overall, the u.s. economy added 295,000 jobs in january, with 51,000 of those in professional and business services. the unemployment rate fell 0.2 percentage point to 5.5 percent. read more →

vesting can cover part-timers, too

by

businesswoman with piggy bankpartial credit is an option for those whose schedules vary over their careers.

by marc rosenberg
retirements & buyouts

full vesting age is different than mandatory retirement age.

more on partner retirement: retirement vesting: the devil’s in the details | compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | if clients leave, do you reduce retirement benefits? | three ways to calculate goodwill payable in partner buyouts, none of them great | the ins and outs of aav for goodwill | clients leaving? time to reduce retirement benefits | how to set terms and limits for goodwill payouts | partners may balk at guaranteeing retirement obligations

these two ages are similar, but most firms treat them differently. for instance: read more →

retirement vesting: the devil’s in the details

by

money rolland two common methods fully illustrated.

by marc rosenberg
retirements & buyouts

vesting of retirement benefits is not unique to cpa firms. but vesting concepts for accounting firms are somewhat unique and are important to understand.

more on buyouts: compromise is in order for some goodwill payouts | when retiring partners take a specialty with them | if clients leave, do you reduce retirement benefits? | why you’ll get less from your partners in a buyout than you might by selling the whole firm | three ways to calculate goodwill payable in partner buyouts, none of them great | eat what you kill? then maybe ‘book of business’ is for you | the multiple of compensation method, fully explained | the ins and outs of aav for goodwill | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | how to set terms and limits for goodwill payouts | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

employee retirement plans are intended essentially as “savings programs” that people can take with them when they leave the firm, even if they depart well in advance of a normal retirement age. when there is employer matching, vesting provisions are common, and vesting is fairly rapid. in contrast, vesting in partner retirement plans is intentionally slow.

read more →

when compromise is in order for some goodwill payouts

by

businessmen standing on dollar billtwo ways to deal with the loss of a major client.

by marc rosenberg
retirements & buyouts

sometimes you need a creative compromise for dealing with the issue of linking client retention with goodwill benefits.

situations that could cause a firm to factor in lost clients in calculating goodwill benefits include:

  1. client loss, regardless of who is at fault.
  2. non-traditional services that were not institutionalized and hence, left the firm with the lead partner.
  3. loss of a significant client.

read more →

when retiring partners take a specialty with them

by

businessman sitting on scales with stack of coins in other traynon-traditional services must be ‘institutionalized’ to be valuable.

by marc rosenberg
retirements & buyouts

the only reason firms pay goodwill-based retirement benefits is to retain the clients managed by the retiring partner.

more on partner buyouts: if clients leave, do you reduce retirement benefits? | why you’ll get less from your partners in a buyout than you might by selling the whole firm | eat what you kill? then maybe ‘book of business’ is for you | the multiple of compensation method, fully explained | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | partners may balk at guaranteeing retirement obligations

if a firm were 100 percent certain that all of a retiring partner’s clients would leave the day after the partner settled in at the retirement community, i doubt the remaining partners would be terribly motivated to sign any retirement checks. read more →

we’re back! tax and accounting employment hits new high, surpassing january 2008 peak

by

it’s a 1.8 percent hike from boom times. we’ll take it.

tax, accounting and bookkeeping employment, through january 2015
tax, accounting and bookkeeping employment, through january 2015

the u.s. tax, accounting and bookkeeping industries have fully rebounded, surpassing the previous january 2008 peak, according to 卡塔尔世界杯常规比赛时间 sources.

here 卡塔尔世界杯常规比赛时间 reports on:

  • current hiring trends in each of the bookkeeping, tax, payroll and cpa segments of the industry.
  • average hourly wages for key segments.
  • typical hours worked per week.
  • and trends concerning women in the accounting workforce.

while cheering the recovery, the new employment trends represent intensifying competition for talent, as well as clients.

read more →

if clients leave, do you reduce retirement benefits?

by

burning money dollarphotoclub_69980042.jpgwhy today 1 in 5 firms links client loss with payout reductions.

by marc rosenberg

many things have changed during the history of the cpa profession. twenty or more years ago, the majority of firms valued their goodwill at one times fees and at the same time, had a provision in their retirement plan to reduce the goodwill benefits of a retiring partner if her clients left when she exited the firm.

by contrast, today the average goodwill valuation is roughly 80 percent of fees, and only 20 percent of firms have a provision that links client loss with benefits.

let’s analyze each of these two changes. read more →

why you’ll get less from your partners in a buyout than you might by selling the whole firm

by

toy soldiers battle on and for dollar billshow to determine partner retirement payout terms and annual limits.

by marc rosenberg

the vast majority of firms pay retirement benefits over a 10-year period, according to our research.

more on retirement: three ways to calculate goodwill payable in partner buyouts, none of them great | eat what you kill? then maybe ‘book of business’ is for you | the multiple of compensation method, fully explained | the ins and outs of aav for goodwill | 5 points to consider when paying out goodwill | clients leaving? time to reduce retirement benefits | how to set terms and limits for goodwill payouts | 4 ways to decide how to pay out capital | partners may balk at guaranteeing retirement obligations

we occasionally see five to seven years at lower payout levels. and some firms under $10 million adopt five-year payouts for goodwill, reasoning that because five-year payouts are common for the purchase of a cpa firm, the same term should apply to their own buyouts.

but external purchases of firms are quite different than internal buyouts. read more →