Braddon Group

Since Torrillo & Associates, LLC, (of which I am the managing member) opened in 2004, our local 15-person firm has been dedicated almost entirely to employee benefit plan (EBP) audits. We began doing these audits early in our careers, and when we were ready to go out on our own and realized what a great specialty they would be for a small firm, we became even more passionate about them. Specialization has proven to be an excellent choice for our firm because we’ve been able to distinguish ourselves in a complex area. If you’re wondering if this niche is right for you, take a look at some of the benefits we’ve enjoyed.

Our time and energy are focused. Before beginning our practice, we had worked on EBP audits at a Big Four firm, so we were aware that this was a highly specialized field. However, by working in this particular niche, we were able to invest all of our energy into becoming experts, focusing our training needs and giving us an advantage in the marketplace. We spend a lot of energy keeping up with new developments in our niche. Our firm’s quality control director and I volunteer our knowledge for AICPA and state CPA society technical projects and committees, and we send our staff to local and national EBP conferences. When taking on work, we stick to what we know and reach out to other experts when necessary, including the AICPA, the Department of Labor (DOL) or our network of ERISA and fiduciary advisors and investment advisors.

Our narrow focus is a competitive advantage. While we are a small firm, we actually stand out to clients when it comes to EBP audits. All our staff specialize in this area, and even some large firms’ local offices don’t have as many people specializing in EBP audits as we do.  

We can ease the process for our clients and avoid workload compression. Some of our competitors who do fewer EBP audits aren’t able to take on work in January with an April deadline due to commitments to other clients, or they charge a premium for these engagements. Our specialization enables us to plan ahead and avoid last-minute time crunches. For our clients, the audit is a once-a-year process, but it’s something we do year-round. We step in to help make it easier for them by “quarterbacking” the audit. Similar to how a quarterback leads the offensive team, we’ll lead the audit by getting information from our clients’ service providers and preparers of the Form 5500, gathering participant data from their human resources staff and coordinating our work with payroll. There’s less hassle for the client, and we’re better able to maintain control of our schedule and avoid overload.

We’ve built strong referral networks. We’ve had great success in creating a wealth of relationships with other firms. For example, we don’t do single audits or tax, so we refer that work out. Other firms are comfortable referring work to us because our specialization ensures that we are not going to compete for engagements outside our niche. We’ve also built great relationships with independent fiduciary and investment advisors who not only assist clients but provide tremendous opportunities to grow, network and advance our specialization.

We can spotlight potential pitfalls more easily. EBP audits are different from most audits because they contain two components: One is the financial statement audit, with which all auditors are very familiar. The second component is compliance, which includes the DOL (concerned with protecting plan participants) and Internal Revenue Service regulations (concerned with protecting taxpayers). The rules are complex, and auditors may not have a thorough knowledge of them if they don’t do a lot of EBP audits. Because our specialized experience makes us aware of possible problems, we can avoid missteps and help clients find and correct their compliance issues. This has paid off for us—the DOL inspected our firm most recently in 2016 with no matters noted.

We have a hiring and retention advantage. In a small firm with a narrow focus, staff get a lot of hands-on opportunities early on, which is something that has definitely helped us in the recruiting process. Our employees know they are making a difference when they fix a benefit calculation or save a client money. In addition, instead of being assigned to one person, our staff works with people at all levels, from partner on down. They take on a range of projects and receive a broad business perspective that will serve them well as their careers progress.

Choose a Niche and Build Your Expertise

Specialization has helped us build a thriving practice that allows us to manage our schedule, attract and keep great people and develop valuable networks. As all practice areas take on greater complexity, practitioners may find it more and more difficult not to specialize. But we can tell you from experience that CPAs who find a niche that they’re passionate about will enjoy many benefits.  

David A. Torrillo, CPA, ABV, CVA, managing member of Torrillo & Associates, LLC, in Glen Mills, PA. David is a member of the AICPA Employee Benefit Plans Expert Panel and the Pennsylvania Institute of CPAs Employee Benefits Plan Committee.

Umbrellas courtesy of Shutterstock.

     

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Even though the beach is still calling, it’s almost time for students to think about the days when they’ll be loading up their backpacks, charging those computers and setting alarms for earlier than 10 a.m. – because the new school year will be here before you can say ‘fall semester.’

If that sound stressful to you, you’re not alone. On top of all the stresses associated with learning new material, meeting new people and challenging yourself intellectually, there is also a significant financial cost associated with the start of a new academic year. Regardless of whether you’re a parent thinking about your children’s back-to-school budget, a college student living away from home, or a full-time worker attending night school, the challenges are similar.

School requires many different items to be successful – all of which can add up in a hurry if you’re not careful. Here are some widely applicable tips for managing back-to-school costs:  

1. Save for textbooks and materials: Textbooks and materials for higher education classes can rapidly add up to hundreds, or even thousands, of dollars for just a semester. Starting a savings plan for these items ahead of time can help reduce unpleasant surprises down the road. Make sure to confirm with professors if you can buy used editions, or purchase them from discount textbook sites – you’d be surprised how much you can save. Bonus tip: unless there’s reading you need to do ahead of your first day, it can pay off to wait until then to buy your books, as instructors sometimes make last minute changes, or provide online access to or print outs of all the materials you’ll need.
2. Don’t forget incidental costs: There are always unexpected costs when it comes to education. Some of these costs are obvious, but there are other costs you might not think of right away. Calculators, different types of database access, or even buying large amounts of paper and ink can cost a pretty penny. Don’t let these slip your mind!
3. Double-check your aid: With the number of charter and other non-public options for elementary and high school education, the concept of financial aid is not something limited to college students anymore. Right now, before the school year starts, find out what you qualify for and what you are actually receiving.
4. Make a budget: This might not be a groundbreaking idea, but you’d be surprised by how many people fail to put together a budget for back-to-school shopping. Like anything else, not putting together a plan or budget before you start spending money will almost always result in you spending more than you should. Make a plan, stick to it, and your wallet will thank you down the road.
5. Research helpful tools: One tool the AICPA recently rolled out is a new interactive digital game, Yesterdays’ Tomorrow. The game allows players to see the outcomes of financial decisions made during different stages of their lives. With college and higher education representing a significant financial investment, this game can help bring to light important aspects of planning for college and more.

Additionally, the AICPA has a wealth of information, available free of charge, to help you get a better handle on your personal finances and budgets. Check out 360finlit.org and feedthepig.org for tools and advice to help you build a successful financial future.

While back-to-school may be a hectic time of year, it doesn’t have to blow a hole in your budget. If you put together a plan for your spending, you can reduce your stress levels. So, get those pencils sharpened and USB drives out, the new school year is almost here!

Sean Stein Smith, CPA, CGMA – Member of the AICPA’s National CPA Financial Literacy Commission and Assistant Professor at Rutgers University

Back to school courtesy of Shutterstock.

     

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The last few years have been inundated with major acquisitions, each creating buzz from within and beyond the business world. To name a few, in June of 2016, Microsoft acquired LinkedIn (which had already acquired online learning site Lynda.com the previous year). Fast forward to last month when Walmart announced it would buy Bonobos – a mostly-online men’s upscale clothing retailer – and Amazon announced it was set to buy Whole Foods Market.

This last acquisition particularly interested me given the somewhat recent debut of Amazon’s flagship grocery store, Amazon Go. This grocery store is unique. Sure, like all others, it sells packaged foods, produce and prepared meals. But what makes Amazon Go different is not what it has but what it lacks. There are no clerks, no tills and – most importantly – no lines. Shoppers simply scan their smartphones when they enter. When they remove an item from the shelf, it’s added to a virtual shopping cart. The customers are then charged for items automatically as they leave. In short, Amazon has an almost preternatural knack for finding pain-points in our everyday consumer experiences. Then, they work tirelessly to alleviate those pains. In the case of Amazon Go, which is currently open only to Amazon employees in Seattle, this means eliminating long lines and payment hassles.

Of course, we don’t know the strategy behind the Amazon-Whole Foods acquisition: it may seek to replicate the Amazon Go model on a larger scale; it may use its web expertise to position and sell Whole Foods products online; or – as some have suggested – it may capitalize on Whole Foods highly-prized shopping data to improve its own online grocery sales. Regardless of Amazon’s intentions, the disparity between its model and Whole Foods’ will likely strengthen the innovation behind bringing its master plan to fruition.

In a recent interview at the AICPA ENGAGE conference, Abigail Posner, Director of Strategic Planning at Google, pointed out that amazing products and services often arise from unexpected partnerships. Posner says that merely at the suggestion of two random words like chocolate and pillow, the human mind begins trying to find connections. The connection it finds may very well be the next big idea. Using the chocolate and pillow example, innovators may develop chocolate-covered melatonin for a midnight snack that improves one’s circadian rhythm. 

When I asked some colleagues what their dream acquisitions would be, Posner’s theory proved true.

One of my peers suggested that, “if the Humane Society used OKCupid’s dating algorithm, people could easily match with their perfect pound pet.” Another colleague devised a clever business model by combining the forces of Etsy and Lyft. “Etsy could sponsor skill-building workshops at homeless shelters, teaching residents not only about crafting but also about entrepreneurship and managing money. Lyft could then deliver the items locally, and the homeless could pocket a living wage.”

These ideas, unsurprisingly, sprout from the modern mind. As Posner suggests, “creativity is about solving problems.” We’re problem-solvers by nature, and we’re adept at connecting seemingly disparate dots, these connections often giving rise to innovation and adaptation. Google is no longer just a search engine. Now, it creates cutting-edge consumer products, from smart home devices to driverless cars. Microsoft is no longer just software; it’s moved into mobile and gaming arenas. And by diversifying its products to include healthy snacks and beverages, PepsiCo has continued to report earnings despite an exponential downward trend in soda sales.

Although some business model adaptations are forced (think the transformation of the common candle from utilitarian source of light to scented home décor), the most thrilling innovations are disruptive and predictive; not responsive. Disruption is no longer a dirty word. Disruption is what happens when someone is brave enough to question status quo, to champion possibility over prudence, and to forge a trend that others will follow. Disruption is a catalyst for ideation, and, as Abigail Posner puts it, “ideas are the currency of transformation.”

What opportunities to innovate do you see within your own practice or organization? Reflect on this, or pose these questions to your colleagues. Organize an ideation session, and accelerate your solution from idea to reality.

Brock Faucette, Corporate Communications Manager, Association of International Certified Professional Accountants

Innovation courtesy of Shutterstock

     

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We all get used to doing things a certain way. It’s easy. It’s comfortable. But over time, we lose sight of whether what we’re doing makes sense. Is it effective? Is it worthwhile? Does it take more time and energy than it returns? It’s worthwhile to take a hard look at how you market your services and ask tough questions.

Every day, CPA firms across the country rely on ideas for promoting their services that might not present the best value. Call them old habits or if-it-ain’t-broke-don’t-fix-it syndrome, but the result is the same: results that are “meh.” What more could you do to promote the very real value you bring to clients on a daily basis? Let’s start with what you might be doing now that may not be effective.

1. Wordy, confusing or complicated ads.

We live in the age of the 140 character tweet. You have probably noticed that communication today is all about being concise. Gone are the days of full-page print ads filled with text that explains your services in minute detail. They won’t get read. Today’s promotion is a line of text in a digital ad, or a short blurb on a web page. Anything more, and your audience is likely to tune out.

Equally ineffective are promotions that use technical lingo, industry speak or try too hard to sound studious. Your clients want a simple, clear value proposition. They want you to show quickly and plainly how you solve a problem for them. Keep it short, keep it simple. Impress your audience by respecting their time and getting to the point fast.

2. Forgetting the all-important check-ins.

Serving the clients you DO have means keeping up with them. Quarterly (or at least semi-annual) check-ins provide you with opportunities, and your client with better service. This applies to individuals AND businesses both. Has there been a regulation change at the local, state or federal level? A recent event in your client’s profession? Did their business appear in the news? You have a great opportunity to make a call or send an email or text to catch up.

There’s a very good chance that your clients aren’t aware of all you can do for them. Communicating your value is a year-round proposition, and one savvy firms take seriously. By spending just a few extra minutes a week catching up with your clients, you can reap major rewards. If you only speak with your clients when they come to you, you’re making it harder on yourself to promote your firm’s services.

3. Not paying attention to the next generation.

If you’ve gotten comfortable serving a particular kind of client, you are missing a significant way to grow business. Millennials are the largest living generation, having recently overtaken Boomers. And with a $15 TRILLION wealth transfer about to take place as Boomers pass on what they have accumulated to their children and grandchildren, it behooves you to adapt (or pay attention). Millennials are the future of business.

With that future is a host of new technologies that Millennials expect. Keeping up may require changes—email is increasingly read on mobile devices, for example, meaning differences in how it should be formatted. It will take some changes in the way you think and do business to make progress on this front. Consider hiring someone qualified to guide your firm in engaging the new generation.

And here’s the great one.

The value a CPA brings to the planning and running of a new business is powerful. The #CPApowered website is the hub of the AICPA’s efforts to showcase the numerous ways in which a CPA is a small business’ most trusted continuous strategic partner. Since its launch in 2014, the award-winning #CPAPowered program has reached more than 3 million people through innovative digital media and content strategies. This year’s campaign features two breakthrough, engaging 30-second videos that you can share through your website and social media channels. We’re inviting firms and state CPA societies to join in the action this fall and promote your organizations alongside a national cable TV and social media buy. There are multiple options for participating. Sign up forms (available online) are due by August 15.

Lisa Simpson, CPA, CGMA, Associate Director–Firm Services, Association of International Certified Professional Accountants

 

     

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As a child, I loved watching movies about summer vacations. To someone from a low-income household whose summer adventures were circumscribed to the occasional elementary school-run day camp, the idea of vacationing was exotic – regardless of whether the family went to Walley World (National Lampoon’s Summer Vacation) or to a charming Massachusetts beach town like Amity (JAWS). Even the latter, where an insatiable Great White swallows poor beachgoers whole, seemed preferable to languishing away hours reading comics in my sweltering bedroom, ignoring my mom’s relentless nagging to ‘go play outside.’

 Although many cast JAWS aside as simply a horror movie, to me, it’s always been much more. It’s a classic-if-not-quintessential man vs. beast odyssey, not much unlike those found in Greek mythology. But whether you classify the film as horror or adventure, JAWS undeniably plays to certain fears. Galeophobia (the fear of sharks) is akin to a fear of the dark in that it taps into an anxiety of being unable to see those things which may harm us. In terms of sharks, however, this fear is largely misguided.

According to the American Shore and Beach Preservation Association (ASBPA), an estimated 180 million Americans take 2 billion beach trips annually. By contrast, National Geographic reports that there are only about an average of 19 shark attacks in the U.S. annually – and only one proves fatal in a two-year period. So, if you’re super cautious, maybe it makes sense to avoid the .000000025% risk.

In other words, the ‘beast’ in this particular ‘man vs. beast’ struggle is not the shark; it’s our own unfounded fears.

Of course, it doesn’t help that Shark Week is ramping up. This is a huge event for many – not the least of which, the Discovery Channel, which hosts this week-long elasmobranch extravaganza every summer. It amps up the risks and the fears in a most sensational fashion. This Sunday, for example, Michael Phelps will apparently race a shark.

No. Seriously.

Like most Americans, I enjoy a little sensationalism. But upon closer examination, I’ve found there are other everyday activities far riskier than a swim in the ocean. In fact, watching Shark Week may be deadlier than sharks themselves.

Did you know, for example, that the U.S. Consumer Product Safety Commission (CPSC) released a report warning people of death-by-HDTV?  From 2000 to 2011, 349 people died from toppling furniture and appliances – usually flat screen TVs. Since Leichtman Research suggests 81% of Americans own at least one flat screen (about 260,334,000 people), the aforementioned hazard carries an approximate risk of.000025% – three decimal places greater than a fatal shark attack for those who are counting.

Let’s also say you enjoy celebrating Shark Week in style. You decide to pop a cork of your favorite bubbly. Just know that it’s far likelier that a rogue champagne cork – not a rogue shark – will take your life. Of the 300 million bottles produced each year, an average of 24 will pop their tops in a way that leaves imbibers with a headache from which they’ll never recover (that’s .000008%).

And let’s assume you say “To heck with Shark Week. I’ll just sit here twiddling my thumbs.” That’s not advisable, either. Apparently, you can literally die from boredom (boredom has a pesky way of leading to unhealthy habits and poor life choices). 

In other words, go do that thing that, as a child, I so longed to do. Go out and explore the world. It’s okay to let loose now and then. Resetting is good! Not only does taking a vacation make good business sense, it makes good sense from a health perspective.  It’s riskier not to take that trip, not to unplug, not to unwind. So what are you waiting for? You’ve worked so hard thus far this year. Why are you still at your screen reading this? Take the plunge. Or at least consider wading.

Brock Faucette, Corporate Communications Manager, Association of International Certified Professional Accountants

Shark courtesy of Shutterstock

     

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Part I

By now, most professionals who serve not-for-profit organizations in governance or financial accounting roles have gained a basic understanding of the impending changes to the not-for-profit financial reporting model. This two-part series focuses on implementation and offers actionable recommendations to help not-for-profits prepare for the impacts of the new guidance. 

Look at the New Standard through the Lens of Your Chart of Accounts

The Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, will impact several line items in the financial statements of not-for-profit organizations. To accurately and efficiently reflect those changes, it’s important that not-for-profits create a plan to adjust their chart of accounts during 2017 or 2018.

The timing of the adjustments will depend on your organization’s fiscal year-end and whether you plan to early-adopt the new standard. As you prepare to implement the new standard, be sure to discuss the timing with your external auditor to ensure there will be no interruption in the audit and to determine if comparative financial statements should be presented in the year of implementation.

The new standard will impact the chart of accounts in five areas: liquidity, net assets, investment return, statement of cash flows and expense reporting. Recommendations for chart of account modifications in these areas will be covered in this blog post series. Keep in mind, the exact types of adjustments depend on the accounting system the organization uses.

Liquidity

The standard requires qualitative information about how a not-for-profit manages its available liquid resources. It also requires quantitative information illustrating the availability of financial assets at the balance sheet date to meet cash needs for general expenditures within one year of the balance sheet date. To capture this information, consider the following:

• Report assets as current and non-current. In many accounting systems, this can be done by grouping accounts on the balance sheet, but you may need to add new accounts to provide the additional level of detail needed.
• Determine how to track the information related to external limits imposed by donors, laws or contracts and set up any necessary codes. For example, cash with use restrictions should be readily identifiable.
• Make sure your implementations of liquidity and net asset requirements (see below) are aligned.

Net Assets

Not-for-profits currently report net asset balances in three classes: (1) unrestricted, (2) temporarily restricted and (3) permanently restricted. The new standard requires not-for-profits to report net assets using two classes: (1) those with donor restrictions and (2) those without donor restrictions. Consider the following recommendations to address these changes:

• Create a new account called “net assets with donor restrictions” to roll up the temporarily and permanently restricted net asset accounts. If your software allows you to create report groups, you should be able to keep your current temporarily and permanently restricted net asset accounts and just use the grouping feature to combine them for reporting purposes. This will allow you to continue to track the details needed for note disclosure. Remember (1) not-for-profits will still need to track the different types of donor restrictions to support the requirement to disclose the nature and amounts of those restrictions and (2) if the organization has any endowment funds that are considered “underwater,” those funds’ balances will need to be reflected in the new account.
• Rename the unrestricted net assets account “net assets without donor restrictions.” If the organization has instituted a policy that stipulates an implied time restriction for donor-restricted gifts of property and equipment that will expire over the useful life of the asset, you will need to reclassify any remaining balances to this account.
• Consider having your board set aside amounts under your operating reserve policy as board designations. If you choose to do this, think about creating an account called “operating reserves.” Doing so will allow you to break out this information for reporting purposes. Depending on your accounting system, you may add a restriction code, a fund code or a net asset account.
• Consider adding additional subaccounts under “net assets without donor restrictions” for specific board designations, such as investment in capital assets and quasi-endowments. With the new disclosure requirement to provide quantitative and qualitative information about board designations on net assets, this is a good time to review existing board designations to determine if they are still relevant. You may also wish to have the board reaffirm those designations at a future meeting. There is no requirement for an organization to have board-designations on net assets. If there are none, be sure to document that fact. Remember, the organization will likely need written policies/practices regarding board designations on net assets, even if there are no designations.

Looking at potential revisions to your chart of accounts is just one action you can take now to prepare for implementation of the new financial statement presentation standard. Be sure to keep an eye out for Part II of this series, which will cover recommended chart-of-accounts changes related to investment return, statement of cash flows and expense reporting, as the AICPA’s Not-for-Profit Section continues to keep you up-to-date on all things related to the FASB not-for-profit accounting standard.

Cheryl R. Olson, CPA, CGMA, Director of Not-for-Profit Consulting, Clark Nuber, PS. Prior to joining Clark Nuber, Cheryl was Director, Council Financial Consulting at the Girl Scouts of the United States of America. She volunteers on the AICPA Not-for-Profit Advisory Council and is an instructor for AICPA’s Not-for-Profit Certificate II, a video-based eLearning program for not-for-profit professionals and their business advisors.

Diane Shey, CPA, Lead Software Implementer, Clark Nuber, PS. Diane oversees deployment and training of various accounting and fundraising software programs. Her clients include not-for-profits, associations, foundations, as well as organizations providing healthcare, arts and recreation, and social services.

Client meeting courtesy of Shutterstock

     

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Are you looking to expand your practice beyond financial statements and tax returns? If so, providing more personal financial planning advice and support, which will help clients plan for their financial future, may be the key to successful expansion. But how do you express the value you’ll provide to your clients? Here are some value propositions that CPAs can use to both describe and demonstrate value of those services.

Step One: Recognize the Difficulty of Selling an Intangible Value

In the world of investment advice, defining a value proposition is relatively straightforward because the return on investment (ROI) can be easily measured. And tax savings from effective tax strategies is similarly concrete.

However, when it comes to financial planning, defining a value proposition becomes far more difficult because it involves selling an intangible service and the results are hard to measure.

Step Two: Six Key Value Client Propositions

So, when proposing a long-term service like financial planning to a client, how do you explain exactly what the deliverable value is?

One way is to frame it. Financial life planning pioneer Mitch Anthony is trying to improve a client’s “Return On Life” (ROL, as opposed to ROI on a particular investment). Nonetheless, the goal is to become less investment centric, and to focus more on increasing the client’s ROL. This can be explained with six key value propositions of being their ongoing financial planner:

• Organization – Bring order to a client’s financial life by getting his or her financial house in order at both the “macro” level of investments (e.g., insurance, estate, taxes, etc.) and “micro” level (e.g., household cash flow).
• Accountability – Help a client follow through on financial commitments by prioritizing goals, showing the client the necessary steps to take, and regularly reviewing progress towards achieving those goals.
• Objectivity – Offer insight from an outsider’s point-of-view to help a client avoid emotionally-driven decisions in important money matters. You can do this by being available for consultation at key moments, doing the necessary research to ensure you have all the information, and managing and disclosing any of your own potential conflicts of interest.
• Proactivity – Work with a client to anticipate certain life transitions and how best to financially prepare for them, by regularly assessing upcoming situations and creating an action plan to address and manage them ahead of time.
• Education – Conduct the appropriate research to thoroughly understand a client’s situation, then provide the necessary resources to help facilitate the client’s decisions. Finally, explain the options and risks associated with each choice.
• Partnership – Help a client prepare for a healthy financial future by taking the time to clearly understand your client’s background, philosophy, needs and objectives. You can achieve this by working collaboratively with your client and on their behalf (with the client’s permission), and being transparent about your own costs and compensation.

Step Three: Living up to The Proposition

Stating these value propositions is easy, but actually executing them still takes focus and effort. For example, turning the “data gathering” meeting into a client-centric “get organized” meeting can make a world of difference. And saying you’ll work in partnership with your client means you need to prepare the financial plan collaboratively, in real time with them, not just assemble the plan behind the scenes and instruct your client on what to do next.

Thus, the core value propositions of financial planning are arguably not only good information to share with clients, but they provide a solid guidepost for you to improve your services. Helping clients generate a better ROL requires digging deeper than what many CPAs are accustomed to.

Explaining and communicating financial planning services to a client is difficult enough. So, it’s crucial to develop an effective means of describing and executing the value you can provide. And these value propositions can help pave the way.

For more information on expanding your value proposition to include personal financial planning services, the AICPA Personal Financial Planning Division has an extensive suite of tools, resources and guides to help enhance your financial planning knowledge. Also, check out this page which contains information on the opportunities in personal financial planning along with free toolkits and resources to help you get started. 

Michael Kitces, Partner and Director of Wealth Management for Pinnacle Advisory Group. Michael is co-founder of the XY Planning Network and publisher of a continuing education blog for financial planners, Nerd’s Eye View. You can follow him on Twitter at @MichaelKitces.

Value proposition courtesy of Shutterstock

     

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There is a good chance you have visited a physician for a routine check-up. At that appointment, your doctor asked many questions – inquiring about your diet, exercise, stress, and health history – and ran diagnostic tests to assess your overall health. Your physician may not have solved any problems at that appointment, but you undoubtedly valued and were willing to pay for an objective professional to assess your health status.

Why is it, then, that many CPAs doubt the value of offering similar diagnostic and planning services to assist clients in identifying potential problems and improving their overall financial health? Broadening your services by asking the right questions, understanding your clients’ financial situation and delivering advice (or making referrals to trusted specialists) is not only valuable to your clients – but also to your practice.

Before you tune out by citing common objections, allow me the opportunity to debunk some of the common myths about personal financial planning (PFP) services.

Objection #1: “I am not a financial planner.”

I often encourage CPAs to consider a simple test to identify personal financial planning. First, does your client’s issue have to do with money? Second, does it involve planning? If “yes” and “yes,” financial planning it is.

If you prefer a more technical description, the AICPA’s Statement on Standards in PFP Services indicates that “PFP services encompass one or more of the following activities: cash flow planning, risk management and insurance planning, retirement planning, investment planning, estate, gift, and wealth transfer planning, elder planning, charitable planning, education planning, and tax planning.” (See SSPFPS paragraphs .03 and .12 for a complete definition of PFP services.)

Accordingly, tax practitioners have financial planning conversations all the time. As an objective adviser, regardless of whether you identify yourself as a “financial planner” or not, clients trust your objectivity and professionalism to go over their full financial situation.

Objection #2: “I am not interested in selling products or managing investments.”

CPAs have been objectively advising individuals for over 100 years. However, when the investment sales industry began using the terms “adviser” or “planner,” confusion in the market ensued. An individual may think, “I have a tax preparer, an estate planning attorney, and a financial adviser; my financial needs are well covered.” Not necessarily. If their “financial adviser” is merely an investment manager, they often have significant gaps in their financial plan. How many times have you seen clients with no will, assets omitted from their trust, inadequate insurance or no realistic retirement plans? This creates an important need and opportunity for CPAs to be “holistic overseers,” making sure that all important areas of a client’s financial life are addressed.

In this role, you are not necessarily handling every aspect of the client’s finances; however, you – like the physician at the annual physical – are asking the right questions and working with other specialists to coordinate the big picture. Many CPA financial planners don’t manage investments or give investment advice, but add enormous value with their knowledge of tax and all it touches – that is, all aspects of the client’s financial life.

Objection #3: “Offering PFP services wouldn’t help my practice.”

The opportunities for practice growth, better client retention and referrals are compelling. Consider the facts:

• PFP is forecasted to grow two times faster than the accounting profession through 2017 (IBISWorld 2014).
• The Bureau of Labor Statistics has projected the need for the number of personal financial advisors to increase 27 percent nationwide through 2022.
• Average total compensation among CPA/PFS credential holders is 11% higher than that of CPAs without the specialty credential (2013 AICPA Compensation Survey).

If you are concerned that your clients won’t pay for these services, consider presenting a one-time overall financial preparedness assessment designed to prevent financial pitfalls or gaps, with optional ongoing monitoring. The diagnostic benefits, motivation and accountability that personal finance assessments provide your clients will logically position you as a much more valuable advisor. Clients often know they should address these needs, but they rarely get around to it or know whom to ask. 

From that assessment, if you end up referring to professionals specialized in solving the issues you and your clients discover, these specialists will undoubtedly value your referrals.  Your collaboration will nurture working relationships.  

Objection #4: “I’m not equipped to offer PFP services.”

Even if you only feel comfortable asking questions of your clients, you offer a critical service by bringing these issues to the forefront. If you are ready to start raising questions to your clients and/or want to dig into deeper planning, the AICPA PFP Section has a range of resources to help you do just that.

Start with this straightforward checklist to analyze a tax return for personal financial planning opportunities, or this interview tool to identify issues and motivate clients. If you are ready to dig deeper, there is a range of PFP practice guides, including a roadmap to help you develop and manage a PFP practice. These tools are just the tip of the iceberg; the PFP Section has comprehensive technical and practice management guidance in this area.

Before you downplay the role you can play in personal financial planning, remember that the value of the questions we ask is as important as that of the answers we bring.

Jean-Luc Bourdon, CPA/PFS. As Principal at Brightpath Wealth Planning in Santa Barbara, CA, Jean-Luc helps clients understand their financial options and choose their best life story. Jean-Luc often speaks and writes about financial planning, as well as serves on the AICPA Personal Financial Planning Executive Committee.

Myths courtesy of Shutterstock

     

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Not-for-profit organizations are always thankful for the generosity of their donors. Sometimes, however, they must consider whether a proposed gift should be accepted. A gift of $100,000 in cash is easy to immediately direct toward the not-for-profit’s mission. On the other hand, a donation of real estate worth $100,000 may come with additional expenses and effort to sell the property before the proceeds are available to support the organization’s mission. Having a formal gift acceptance policy can help define when an organization should, or should not, accept a proposed gift.

A well-written policy can guide donors and development staff as to what types of donations can or should be accepted, and what review procedures are necessary for certain gifts. When developing a policy, consider the following:

• Clearly define the types of assets the organization will consider accepting. List the types of gifts accepted such as cash, publicly traded securities, closely-held business interests, real property, etc.
• Define the process for determining whether a gift will be accepted, including which positions have the authority to accept them. Consider when the organization’s staff will review proposed gifts, and when it may be prudent to engage additional expertise, including outside counsel. For certain gifts, it may be useful to have a gift acceptance committee available to review a proposed donation.
• Identify what is required prior to final acceptance. Depending on the type of property, requiring specific due-diligence items prior to acceptance can minimize risk (e.g., qualified appraisals, environmental analyses, etc.).
• For illiquid gifts, establish clear timelines for expected liquidation of the proposed donation. Define the expected holding period for an illiquid gift, and decide whether an additional cash gift from the donor is necessary to cover anticipated carrying costs of the asset. Clearly define what is expected of the donor (such as an additional cash gift) if the liquidation of the asset does not occur within the original projected holding period.
• If there are certain types of assets the organization is not willing to accept, clearly identify them in the policy. For example, items such as tangible personal property (vehicles, jewelry, antiques, etc.) may be more difficult to liquidate, and therefore may not be worth accepting.
• Non-cash gifts may involve more complex tax issues. Instead of providing advice about the tax benefits of gifts, encourage donors to seek guidance from their own professional advisers to assist them in their decision-making process.
• Because of the additional work that can accompany an unusual gift or unusual gift restriction, consider whether a minimum gift amount is prudent. When significant time and funds must be spent prior to a donation being accepted, a minimum donation amount may be warranted to cover upfront costs.

A thoughtful gift acceptance policy can help protect an organization against unknown risks and guide board members and staff when it is appropriate to say no. By crafting a policy that clearly defines what should and should not be accepted, the organization can focus its efforts on those gifts that will generate the greatest impact in helping the not-for-profit achieve its mission.

For information on gift acknowledgement letters—another recommended best practice, click here. Gift acceptance is just one of the many topics covered in the AICPA Not-for-Profit Section’s comprehensive Resource Library.

Alyssa Federico, CPA, Vice President- Finance, Foundation for the Carolinas. Alyssa’s primary responsibilities include serving as the foundation’s financial point of contact for client relationships and other accounting-related issues. She manages the daily activities of the finance team, oversees the internal controls of the Foundation and ensures adequate controls exist. She is a member of the AICPA’s Not-for-Profit Advisory Council.

Donation jar courtesy of Shutterstock

     

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New technologies offer ambitious professionals the chance to advance their careers, and their firms, to new heights. They can be especially beneficial to women and, indeed, any CPAs who want to set themselves apart professionally and preserve a healthy balance between their work and personal lives. In my own experience, I’ve used my cloud technology knowledge to expand my opportunities, accelerate my progress, boost my worth to clients and reinforce my relationships with them. How does the cloud enhance opportunities for CPAs?  

1. It can expand practice development options.

Cloud-based technology makes it possible to store and access data online where it can be accessed by authorized users from any computer. It’s the tool behind client portals that allows clients and firms to update and collaborate on data they share access to. You can use it to distinguish yourself and your firm.  

When I began my own practice offering outsourced accounting services, I quickly found that many of my clients wanted help with the desktop accounting software they were using. Beyond help with cleaning up errors, they were eager for analyses of the data they were generating and the kind of perspective they could use for making decisions. These software packages have given small business clients greater access to their data, but they also add to businesses’ workloads.

Among other things, cloud-based platforms give accountants access to their clients’ general ledger systems, so CPAs can review their data regularly to alert clients to a new concern or opportunity. They can add even more value by putting together a package of business software in the cloud that is integrated and easy to use and understand. Like many small business people, my clients wanted to improve cash flow management, budgeting and business processes, but often weren’t aware of the solutions available. By developing an expertise in the technologies that could help them, I began building a real partnership with clients, offering a skillset they needed but couldn’t afford to bring in full time. For professionals seeking to set themselves apart in practice development, the cloud can be a valuable resource.

2. It can help raise visibility.

Because of my success in growing my practice with the cloud, I was approached by a regional accounting firm that wanted to bring me — and my thriving business — in as a partner. My specialty gave me a fast track to a leadership role. Within a firm, a CPA might raise his or her visibility and lay the groundwork for cloud technologies by educating firm leaders about the advantages of a cloud-based niche and assembling a client base. CPAs can demonstrate their ability to bring in business and build a strong practice area on their own terms and their own schedule.

No matter your niche, the cloud can be made to work for you. Say, for example, that a CPA has a specialty in health and wellness businesses, such as chiropractors and fitness and yoga studios. That CPA would get up to speed on not only the accounting cloud-based software that was best for those clients, but also the scheduling, billing or other packages that fit the needs of their industry, putting them all together in a customized dashboard. The CPA would deliver the customized industry insights and access to the big picture that small business people often can’t find anywhere else.  

3. It’s perfect for a flexible schedule.

With cloud technology, CPAs can deliver a great deal of value without physically being in an office or keeping specific hours. That can change a firm’s leadership progression, because it allows professionals to remain on their career paths without slowing down or leaving the profession temporarily due to family or other concerns. 

It is true that working remotely and through the cloud requires new steps to ensure you maintain those important relationships with your clients and your team. I use Google Hangouts for messaging, voice and video calls. I also use Slack, which allows me to create private channels that organize conversations and share documents. While tools like Skype and Zoom video conferencing can make contacts more personal, it may still be necessary to step back sometimes and use in-person contacts to ensure that those important personal bonds are still in place.

What can the cloud do for you?

Given their soaring growth, cloud-based technologies are clearly an area of opportunity for CPAs and their clients. They can also be a boon for CPA firms that seek to promote women’s leadership and better engage with Millennials—both male and female—who are excited about new ways to work and who seek greater balance in their work and personal lives. These technologies can equalize opportunities since they provide assistance that clients will appreciate, and are easily adapted to nontraditional schedules. You’ll be amazed at the changes they can make in your organization or career.   

Amy Vetter, CPA.CITP, CGMA, Chief Relationship Officer-Partner Channel, Xero Americas, has been named to Accounting Today’s Top 100 Most Influential People in Accounting and one of CPA Practice Advisor’s Most Powerful Women in Accounting. Vetter was a speaker at last year’s AICPA Women’s Global Leadership Summit. She is also a member of the AICPA IMTA Executive Committee and a CITP Champion.

Cloud courtesy of Shutterstock

     

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