Category: News

Although financial professionals serving not-for-profit organizations still have time to prepare for implementation of the Financial Accounting Standards Board’s (FASB’s) new not-for-profit financial reporting standard, it’s important to consider and discuss the impacts of the new guidance with board members.

In June, we published a blog post answering common questions related to implementing the new liquidity disclosures required under the recently-issued not-for-profit financial reporting standard. This post discusses steps for making that implementation process smooth and effective. 

The new standard requires not-for-profits to provide both qualitative and quantitative information about liquidity and availability of resources as follows:

• Qualitative information that communicates how the not-for-profit manages its available liquid resources to meet cash needs for general expenditures within one year of the balance sheet date.
• Quantitative information that communicates the availability of financial assets to meet cash needs for general expenditures within one year of the balance sheet date. The availability of a financial asset may be affected by its nature; external limits imposed by donors, laws and contracts with others; and internal limits imposed by governing boards.

When contemplating these disclosure requirements, not-for-profits should consider the following steps:

1. Determine the message you want to convey to your stakeholders.

Does your organization have ample resources to fund activities over the next 12 months? If so, you may want to make that clear in the disclosure. On the other hand, perhaps your organization struggles to maintain sufficient resources to meet general expenditures. In that situation, you will want to make your related action plan clear. Some not-for-profits have significant capital projects that may have resources set aside to fund them. In those cases, consider discussing those resources and the anticipated timing of their use.

2. Review your current procedures around board designation of net assets.

With the standard’s emphasis on board-designated net assets, organizations may wish to review and document their procedures for designating net assets, perhaps even creating a board designations policy if one does not already exist. It also may be a good time to revisit existing board designations to determine if they still make sense.

3. Decide on the best presentation approach for your organization.

The guidance requires an organization to provide information about the availability of financial assets at the balance sheet date to meet cash needs for general expenditures within one year; however, there is no prescribed presentation for that information. The standard provides a few example disclosures, but they may not resonate with every not-for-profit. The Not-for-Profit Section offers example disclosures. Independent auditors may also have samples you can use as a starting point.

4. Evaluate whether any changes to accounting and reporting systems will be necessary in order to easily capture information for disclosures.

Once you have determined how you want to present the required information, you’ll need to assess your supporting systems and technology to determine whether any changes or additions will be required to easily capture the information you wish to disclose.  

No matter the size or complexity of your organization, consider starting the discussion now to prepare for implementation of the new liquidity and availability disclosures. Being proactive will boost efficiency internally and help to ensure your disclosures provide meaningful information to your financial statement users.

FASB’s new not-for-profit financial reporting standard is effective for annual financial statements issued for fiscal years beginning after December 15, 2017 and for interim periods within fiscal years beginning after December 15, 2018. Visit aicpa.org/nfp to learn more.

Karen Craig, CPA. Karen is a consultant providing technical accounting, reporting, finance and analytical expertise to not-for-profits with a focus on higher education. She volunteers on the AICPA Not-for-Profit Advisory Council and is an ex-officio member of the AICPA Not-for-Profit Industry Expert Panel. Karen also is a technical advisor to the Accounting Principles Council of the National Association of College and University Business Officers (NACUBO).

     

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We are fast approaching what many believe is crunch time for tax reform. There is a renewed push by the White House and Congress to enact tax reform by year’s end. President Trump is urging Congress to “move fast,” while the House and Senate work to identify a process to make it possible.

As the debate intensifies, policy goals will be fleshed out, trial balloons will be floated in the media, and key lawmakers will get down to business in assembling a package of reforms to the tax code that can pass muster in both chambers.

A mainstay of the tax reform discussions is a call for cuts in the corporate tax rate. Since the vast majority of U.S. businesses operate as pass-through businesses, tax reform plans have also applied the benefits of lower tax rates to certain pass-throughs. These pass-throughs, including S corporations and partnerships, don’t pay taxes themselves, but pass their earnings through to their owners who pay taxes at their individual rates.

Some in Washington have suggested that professional services pass-throughs – such as accounting firms – should not be treated like other businesses because of the mistaken belief they don’t help drive the economy. We know that’s not the case.

Accounting firms play an important role in the nation’s economic growth and job creation. In fact, the U.S. Bureau of Labor Statistics (BLS) reports for 2014 that there were more than 1.3 million accountants and auditors employed in the United States. BLS also forecasts that employment of accountants and auditors is projected to grow 11 percent through 2024, with 142,000 more jobs, faster than the average for all occupations. In 2016, payroll for CPA firms totaled nearly $40 billion, according to the BLS.

Fairness should also be a consideration in how Congress addresses tax treatment of service companies. It makes no sense to distinguish pass-through businesses and partnerships – such as accounting firms – from companies in other sectors merely because of the business’s choice of entity. This is a simplistic approach that does not reflect that in today’s economy, professional service pass-through firms require significant investment in tangible and intangible assets as they compete in the global environment. By unfairly disadvantaging professional service pass-throughs, the incentive to start or grow a business is diminished, with a corresponding loss of jobs and reduction in wages.

In testimony before the U.S. Senate Finance Committee on September 19, the AICPA stressed that “professional service firms are an important sector in our economy and heavily contribute to the nation’s goals of creating jobs and better wages.” 

As part of our advocacy for sound tax policy, the AICPA several years ago developed a framework of guiding principles of good tax policy. Topping that list is the principle of equity and fairness, which states that similarly situated taxpayers should be taxed similarly. We often reiterate the view that equity and fairness is an essential attribute of a good tax system, recommending that equity and fairness be given due consideration in both the making and administration of tax laws.

In the final analysis, and in the interest of fairness, the nation’s accounting firms should be treated no differently than any other job and wage generator.

It is a common refrain in our nation’s capital that tax reform is needed now more than ever. Yes, that is true. And it has been for some time. But let’s be certain that fairness remains a central theme in how we go about it. 

Barry C. Melancon, CPA, CGMA, President and CEO, American Institute of CPAs.

     

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Public speaking is hard, there’s no doubt about it. You need to prepare your speech, carefully choosing your words and crafting your story. Then, you need to devote some serious time practicing– some say up to one hour for every minute of your speech! Finally, you need to fight the butterflies in your stomach to step in front of the crowd, steady your voice, and give your speech.

When it comes to public speaking, accountants face more challenges than the average person. Not only do they need to do all of the above, they also need to translate complex data into easy-to-understand concepts for non-finance professionals.

Financial storytelling takes a lot of work, but it’s a learnable skill. The following are tips from the CGMA research brief, “Six Rules to Delivering a Powerful Financial Presentation.”

Know your audience. Your first step when developing a presentation is to find out what’s most important to your audience.  Then, lead with that piece of information. It will instantly capture their attention and make it easier to keep them engaged throughout the rest of the speech. Manoj Vasudevan, the 2017 Toastmasters International world champion of public speaking, suggests identifying what you can teach your audience, and cutting anything that can appear self-serving or repetitive. “Your speech is not about your ego; it’s about your message,” he told Business Insider. “Make sure that message is worth listening to.”

Nobody’s perfect. Not even champion speakers—and especially not the members of your audience. Don’t fear making mistakes or suffering technical difficulties. Most audience members won’t notice mistakes, but they will notice if you get tripped up by them. When something goes wrong, don’t panic. Take a deep breath, pause, regain your composure, and carry on. And, resist the urge to apologize to your audience – hat only draws more attention to the blooper.

Tell a story. Storytelling is so effective because it provides context to the figures you’re presenting to help make them relatable. A speech is like a conversation–you want to wrap your facts in emotion so your listeners understand why what you’re saying is important. Your job isn’t to read the balance sheet, it’s to offer broader context to the figures and bring a financial story to life.

Use pictures to enhance the data. Use bold, bright, and high-contrast photos to help set the tone for your presentation. Or use props for an unexpected twist. Instead of displaying multiple figures on a large graph, consider data visualization charts and tools. They’ll help your audience quickly identify major trends or anomalies without getting distracted by trying to read a busy slide. (You can always send spreadsheets as a follow up to your presentation!) The CGMA report, “5 Rules of Effective Data Visualisation” can help you generate ideas.

Simplify. You worked  hard to master the vernacular of accounting. Unfortunately, it might as well be a foreign language to your audience. Warren Buffett has said that he writes financial reports like he’s talking to his sisters. “I have no trouble picturing them: though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them.”

It may take a while until you nail the perfect financial presentation. Until then, try to improve upon one aspect at a time, and practice, practice, practice!

For more details and case studies, download the entire report.

Chrissy Jones, MBA, Manager–Communications and Member Engagement, Association of International Certified Professional Accountants

Microphone courtesy of Shutterstock

     

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The rules of engagement for business are changing. Today’s world is complex, evolving, extremely high-tech, and fast. Whether you’re a small, one-person shop or a partner at a large or global firm, you’re probably aware that your most valuable current (and potential) clients are unwittingly converting business as we knew it into business-on-the-fly. And they’re bringing new methods that can also prove beneficial to the CPA.

Our societal landscape is significantly different than it was just a decade ago. There are new faces, new modes of interacting, and technology has inarguably and almost completely taken over. Is there a way to sustain and strengthen your practice in this ever-evolving world? Absolutely. In fact, now is an incredibly opportune time for your firm, especially considering the statistics.

In my presentations, I often share knowledge and new data to illustrate the many ways our communities are becoming increasingly diverse and more high-tech. Here are 9 things to know about today’s decision-makers:

• Women make up more than 50% of the national population. They also account for almost 85% of overall consumer spending.
• 47% of U.S. workers are women.
• America’s population is currently 34% Asian, Black or Hispanic.
• Our ten largest cities are now minority-majority. By 2040, this will be true across the nation.
• The LGBTQ population has $917 billion in buying power per news reports.
• Millennials are now the largest living generation.
• Within this Millennial population, technology is a way of life. They have tech-connect habits and expectations of the profession that are too profitable to ignore, and businesses who win them over are those that accommodate these habits.
• While these population statistics naturally overlap, if your firm isn’t working to attract these clients, you could be missing 76% of loyal clients.
• Since technology is changing at such a frantic pace, some of your current clients’ products and industries will fall away.
  1. Smartphones, for instance, will eventually replace the need for wallets.
  2. Self-driving vehicles will change and possibly eliminate parts of the transportation industry, such as trucking.
  3. There will no longer be a need for typing, and
  4. virtual face-to-face meetings will be commonplace.

These insights into today’s population, and the diversity of thought, perspective and worldview that literally lives right next door, can hopefully provide insight into who your customers are, who they can be, and how to adjust your practice accordingly. This is a dynamic and transformational time, with new avenues to help sustain and strengthen your practice. Opportunities are virtually limitless.

I’ll be sharing more information in a free AICPA webcast that includes a question and answer session for participants, and offers a free CPE credit. Register for “How to grow your practice in a changing environment: technology and generational impact,” to be held Wednesday, Sept. 20, from 1 pm–2 pm ET.

Tariq Khan, founder and CEO of Global Diversity Marketing, is a recognized business leader in marketing, branding, innovation, digital marketing, social media, and diversity. He serves on several boards of directors, is a sought-after keynote speaker, and also teaches marketing, public relations and leadership as an adjunct professor at New York University graduate school.

Grow your practice courtesy of Shutterstock.

     

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Earlier this month, I spoke on Facebook Live with Heather O’Connor from the Association’s Communications team about opportunities firms and small practices have for showcasing their value as strategic advisers.

Many firms today are seeking quality clients who are compatible with the firm’s service offerings. That might sound like a pretty basic statement, but developing a roster of quality clients is anything but basic. Communicating your firm’s value to potential clients should be foremost in your thoughts. For many, the trick is finding a place to start.

But there is good news. Your firm has opportunities to use professional resources and materials provided by the AICPA and enhanced by the new Association of International Certified Professional Accountants. These tools will define and communicate your value, while also helping you attract high-quality clients you’ll retain well into the future.

The first is our #CPApowered campaign. Now in its third year, #CPApowered capitalizes on the strong partnership between the AICPA, firms and state CPA societies to simultaneously reach broader audiences with the objective of promoting CPAs as the trusted adviser to the small business community. Our national campaign includes paid spots on social media and cable television.  Firms can access these high-quality videos for use on their social media channels or websites free of charge.

If your budget allows, these ads can be used on local broadcast TV to supplement the national cable buy. To learn about the complimentary and paid options for your firm’s participation, visit the campaign site. This campaign is a great way to use a professional-quality ad for engaging with small businesses and attracting clients. Co-brandable, printable resources from the CPA Marketing Toolkit for Small Businesses can also help round out your firm’s promotional efforts.

Second, we’ve introduced a new dynamic brand that reflects the vibrancy of the profession and positions you and your designations well in the marketplace.  Incorporating this new market-tested brand into your firm’s brand (or if you don’t have one, simply use this one!) is a powerful way to enhance your firm’s visibility. The new CPA logo, as well as member of the AICPA logos, are available for downloading once you’ve logged in to aicpa.org. By using the logo in your marketing materials, you will create a consistent message that leverages the power of your CPA designation.

Finally, there is PCPS Membership. With almost 7,000 firm members, PCPS continues to be the home for firm practice management and success within the Association. The wealth of tools in areas such as human capital, succession and growth provide a one stop shop for firms. Two of the tools that particularly address attracting and retaining quality clients:

• The Practice Growth & Client Services area offers a specific framework designed to assist firms in creating their own client attraction and retention process.
• The Firm inMotion e-Toolkit aids firms in assessing their current resources and determining what they need most to meet client and staff needs moving forward.

In these complex and extraordinary times, the work CPAs do has never been more important. With the strength of the Association of International Certified Professional Accountants, the AICPA continues to provide you with the tools, resources and advocacy you need to power success for your clients and businesses.  By leveraging these resources and more, you will be taking important steps to grow a quality, loyal client roster for your firm. And that is the ultimate key to achieving a successful and accomplished future for your firm. 

Mark Koziel, CPA, Executive Vice President, Firm Services – PA, Association of International Certified Professional Accountants

 

 

     

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Odds are, you or someone you know were impacted by the Equifax data breach. The breach, which is estimated to have impacted 143 million Americans – nearly half the US population – is considered one of largest data breaches in history. Adding insult to financial injury, Equifax has put the onus on consumers to do their own research about whether or not they need to worry.

But don’t panic just yet—we’ve got steps you can take to help protect yourself. Let’s start with the basics:

What is Equifax? And why do they have my information?

Equifax is one of three major U.S. consumer credit agencies, and if you have ever purchased anything of note, like a car or a house, or rented an apartment, or have had any reason to request a credit report, these agencies have your information.

How did the breach happen?

Cyberthieves were able to access information via a weak point in the Equifax website software between May and July of this year.

What can you do now?

First, check to see if you were potentially affected.

Equifax has an online tool that allows you to look yourself up by your last name and last six digits of you social security number. The tool indicates whether or not you may have been impacted. There have been criticisms of the tool, chief among them it doesn’t definitively tell you whether you have been affected, just that it is likely you have (or have not).  But it is a start. To be safe, you should look yourself up by any names you have ever used. For example, I ran it under both my married and maiden names and found no issues but my poor husband, who has only ever had one name, was impacted.

You were impacted: What now?

• Keep an eye on your accounts at all times. It isn’t enough to simply check after a new cybersecurity breach is reported in the news. This breach happened at least six weeks ago, giving hackers plenty of time to steal valuable information.
• Sign up for fraud protection. Equifax is offering a year of free fraud protection monitoring through its TrustedID Premier program, though there have been some concerns about the program. There are other programs you can sign up for as well if you choose to do so.
• Freeze your credit. If you are really worried, you can freeze your credit. In this scenario, no one can access your credit unless you unlock it using a PIN only you have. If you lose the PIN, however, you will have to go through an arduous process to prove your identity before you can get another one.
• File your taxes early. This will help keep a hacker from filing a return with your stolen information.

How can this be prevented?

Unfortunately, there is nothing consumers can do to prevent being victimized by this type of hack. But organizations, like Equifax, must employ rigorous cybersecurity programs to protect the information they store. As technology advances, so must our security.

If you want to learn more about cybersecurity and the resources the AICPA has available to help CPAs advise their clients on this growing concern, visit the Cybersecurity Resource Center or read some of our previous blog posts about the topic. 

Lauren J. Sternberg, Manager–Communications, Association of International Certified Professional Accountants

     

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My dog Peaches, a cuddly beagle mix, is the love of my life. As with most pet owners, I spend a lot of time with my dog and miss her when I’m not at home. The days that I telecommute are often the highlight of my week because I can relish her company all day. Having a dog at home is beneficial in many ways:  I stand up and walk around more often, get outside for fresh air a few times a day and feel less stressed because I can give Peaches regular snuggles.

One of the benefits of being a CPA sole practitioner, or working for a firm that utilizes virtual offices, is that you can often work from home, allowing you to be with your pets all day. Some CPA firms even allow employees to bring their dogs to the office.

We all feel a little sad about leaving our furry friends at home when we go to work, but being near our pets does more than keep Fido happy. More and more organizations are looking into how bringing your pet to work can benefit employees and employers. A recent study indicated that companion dogs increase prosocial behavior in work groups. A 2017 report shows that pet-friendly offices reduce stress, improve work-life balance and strengthen morale. For CPAs who work long hours, particularly during busy season, having your pet beside you in your home office or at work can bring a much-needed morale boost.

To celebrate our fuzzy loves during “Petember,” we’re showcasing CPAs’ Cute Pet Assistants (CPAs), and the ways they help us do our best work. CPAs on staff at the Association of International Certified Professional Accountants have shared their own “CPAs” below. We’d love to see your pets as well. Tag us on Twitter, Instagram or Facebook using #Petember.

Saturn, CPA to Shelly Guzzetta, CPA, Manager – Firm Services

Evie, CPA to Lori Sexton, CPA, CGMA, Senior Manager – Business, Industry and Government

Boomer, CPA to Lindsey Curley, CPA, Senior Manager – Firm Services & Global Alliances

Storm, CPA to Lisa Simpson, CPA, CGMA, Associate Director – Firm Services

Jon, CPA to Carey Mitchell, CPA, Senior Manager – Portfolio Development & Management

Looking for additional ways to make your small firm more productive? Visit the Association’s small firm resources page. We’ve curated small firm-targeted tools from various areas, including the Private Companies Practice Section.  

Julia Morriss, Manager–Advocacy Communications, Association of International Certified Professional Accountants.

     

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As accounting and finance professionals, we’ve been talking about the coming changes to not-for-profit financial statements for some time now. But many others haven’t heard about the changes, including some not-for-profit board members. Board members are responsible for oversight of the financial reporting process, and as such, they’ll want to take an active role during implementation of the new guidance.

The Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities: Presentation of Financial Statements of Not-for-Profit Entities, was issued in August 2016. The standard applies to all not-for-profits and is effective for years beginning after December 15, 2017. Early adoption is permitted.

Here are five proactive steps to help make sure your board understands the implications of the new financial reporting standard:

1. Identify areas that will be affected: The key financial statement areas that will be impacted by the new standard are:

• net asset classifications
• required liquidity disclosures
• investment return reporting
• statement of cash flows presentation
• functional expense reporting

It’s important for the board to understand how the changes will affect the financial statements prior to seeing the audited version. Consider having the organization’s finance staff, independent auditor or financial consultant provide the board with a high-level overview of the changes and discuss the specific impacts.

2. Discuss the implementation plan: Board members are ultimately responsible for fiduciary stewardship of the organization. However, the board will often delegate certain duties, such as oversight of financial reporting, to the audit and/or finance committee. Management will want to ensure that the board or responsible committee understands the plan to implement the new not-for-profit financial reporting standard, including the timeline and resources needed.

3. Consider the cost: There could be cost implications of implementing the new standard, including additional staff time, accounting system needs and increased audit costs. The not-for-profit’s finance staff and independent auditors can provide input on the budget implications in the first year of adoption, allowing management and the board to plan accordingly.

4. Update and approve policies: Understand that organizational policies might change because of the standard. A good practice is to have at least one board meeting annually to review, discuss and approve policies. Take this time to consider adding “Policy Review and Discussion” to the agenda of one of the established board meetings for the coming year.

5. Review board designations: The financial statements will require disclosure of all board designations and similar self-imposed limits on net assets without donor restrictions. As such, this is a good time for the board to review any existing board-designated net assets. Many organizations have not reviewed or discussed these in years. New board members may not even know they exist. When reviewing interim financial statements at an upcoming board meeting, consider discussing whether the designations are still relevant. The organization may also wantto have the board reaffirm the designations at the meeting. While there is no requirement to have board-designations on net assets, if there are none, be sure to document that fact in the board minutes.

The current not-for-profit financial statement format and terminology are more than 20 years old. The new standard aims to improve financial reporting by providing more useful information to stakeholders and addressing inconsistencies in the areas of expenses and liquidity. While the changes may initially feel overwhelming, they give organizations a great opportunity to better understand their own financial health, tell their stories externally and compare themselves to other organizations. To learn more, join the AICPA Not-for-Profit Section for a webcast on September 13 at 1 p.m. ET.

Cheryl R. Olson, CPA, CGMA, Director of Not-for-Profit Consulting, Clark Nuber, PS. Cheryl provides consulting, training and advisory services in the areas of operational capacity, finance and governance. Cheryl is a member of the firm’s not-for-profit services team and software solutions team. She serves 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.

Candi Avery, CPA, Principal, Clark Nuber, PS. Candi provides audit and consulting services to the not-for-profit sector, offering special expertise in serving life sciences, foundations, arts and schools. She serves on Clark Nuber’s Quality Control and Technical Issues committee, which oversees the implementation of new professional technical standards.

Karen Craig, CPA. Karen is a consultant providing technical accounting, reporting, finance and analytical expertise to not-for-profits with a focus on higher education. She serves on the AICPA Not-for-Profit Advisory Council and is an ex-officio member of the AICPA Not-for-Profit Industry Expert Panel. Karen also is a technical advisor to the Accounting Principles Council of the National Association or College and University Business Officers (NACUBO).

Not-for-profit board courtesy of Shutterstock.

     

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Reading is good for your career. Don’t believe me? Think of all the successful people who make reading a priority – Bill Gates, Oprah Winfrey, Mark Cuban, Warren Buffet and Mark Zuckerburg, to name a few. And they aren’t just reading Facebook updates, emails and tweets. They are committing time to reading actual books.

Why does reading a book matter? The benefits are plentiful and aren’t just limited to reading non-fiction. One important way reading helps your career is by helping you develop empathy. When you connect with a character and begin to understand their feelings and emotions, you are increasing your empathy. You gain valuable exposure to other perspectives, which can help you better relate to your coworkers and clients.

Some of the other ways reading can support professional development include:

Better Communication

Reading helps you develop and improve your written and verbal communication skills through exposure to other writers’ styles, voice and sentence structure.

Expanded Vocabulary

As you encounter new words in context, you learn how to use those words effectively.

Reduced Stress

When you focus on what you’re reading instead of that overwhelming to do list or busy season workload, you distract yourself from everything that is causing stress. Managing your stress helps you be less reactive – which supports better decision making.

Increased Focus

Reading strengthens your ability to focus, a skill we all need to develop in a highly distracting world.

Developed Grit

Successful readers learn to persevere all the way through until the end of a book.

Enhanced Creativity

Depending on the genre, you’ll likely need to use your imagination to picture characters and settings.

Exposure to Leadership

Reading biographies or autobiographies can provide insights into leaders and the challenges they encountered on the road to success.

Ready to start your professional reading program? Here are a few great places to look for suggestions:

Good Reads

Get recommendations from real people on everything from science fiction to mystery to non-fiction and everything in between. Try looking for a book you enjoyed in the past and see what other books people who liked that title recommend.

Oprah’s Book Club

This is a great resource for literary fiction to strengthen and build your empathy.

Gates Notes

Check out Bill Gates for his personal reviews of the non-fiction titles he has read recently.

Jennifer Gardner, Manager–Communications and Social Strategy, Member Learning and Competency, Association of International Certified Professional Accountants

Book courtesy of Getty Images

     

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There is a huge opportunity that most practitioners are ignoring, or worse, dismissing: an untapped client base.

This population doesn’t fit the profile of the typical client. They aren’t in their early 60s, near retirement and don’t fit the typical client profile. They haven’t worked and earned and leaned on you to help them make it to the retirement “finish line,” where they’ll begin to really enjoy the fruits of their labor. In fact, perhaps to the chagrin or confusion of their baby boomer parents, they’re quite different.

As you may have guessed, I’m talking about millennials. Before you tune out, consider the following:

• An estimated $30 trillion in wealth in the United States will be shifting from one generation to the next over the next 30 to 40 years, according to a recent Accenture study.
• By 2020, millennials are projected to be the largest client group by population, according to a Deloitte study, and will see significant increases in wealth as they enter their prime earning years and begin to receive inheritances from their baby boomer parents.
• While their level of assets may not put them on your radar now, many are high earners or entrepreneurs who have complex planning needs and are willing to pay for expertise.

If you’re not serving this generation, now is the time to incorporate them into your prospective client profile. Early adoption of business models that effectively serve millennials will enable you to protect your market share and invest in the future growth of your business. 

Millennials put a high value on trust. By building trust early on and over time, you’ll be well positioned to serve them when they start to see significant growth in their wealth. Furthermore, from a business succession and employee retention perspective, your younger advisers want to work with their peers and have greater job satisfaction when given the opportunity to serve fellow millennials.

Ready to get started? Let’s look at three simple steps to tap into this client base.

Step 1: Understand what motivates them.

Millennials typically don’t consider money as the sole factor of success, seeking work that enriches the lives of others, provides personal satisfaction and supports a lifestyle that may look different than your typical boomer client – favoring experiences over material wealth. Over the course of their lives, they are likely to have many different jobs and may ditch the notion of a traditional retirement for mini retirements or sabbaticals throughout their career. According to a Deloitte study on millennials in developed countries, more than half want to start their own business, and more than a quarter are already self-employed.

Step 2: Identify how you can help them achieve their goals.

With longer life expectancies, massive transfers in intergenerational wealth, high levels of student debt and the entrepreneurial tendencies of this generation, the need for objective and personalized advice to navigate all aspects of millennials’ personal financial lives is critical. High earners who may not have amassed significant personal wealth yet are willing to engage with professionals to help them meet their financial and life goals.

Shift your focus to address their more immediate goals (paying down debt, saving for a down payment or other milestones), recognizing that millennials are less willing to defer their lives for a distant, uncertain future. Helping them articulate life goals – not limited to purely financial goals – is an important first step in partnering with them.

Step 3: Collaborate and consult.

Warning: Traditional financial planning models and approaches don’t always fit when advising millennials. This generation has a unique outlook on work, life and retirement, requiring a different service model that incorporates technology, collaboration and financial life planning. Partner with millennial clients to provide a consultative experience that focuses on clarifying goals, imparting experiential wisdom instead of just knowledge, giving objective opinions, reliably implementing strategies and providing clarity to important decisions. You may find, as I have, that this approach is helpful in serving a broader base of prospective clients who share a similar philosophy and value set as their millennial counterparts.

If you want to dive deeper into what makes this generation tick and how to serve them, check out a Journal of Accountancy article and a recording from a webcast I presented last month on advising millennial clients. Additionally, the AICPA Personal Financial Planning (PFP) Section has resources to serve all your individual clients. The PFP Section is the premier provider of information, tools and guidance for practitioners who advise individuals and is an invaluable professional resource as you grow and develop your practice to meet the needs of your existing and future clients.

Mark Astrinos, CPA/PFS, CFP, RLP. As principal and founder of Libra Wealth in San Francisco, CA, Mark works with clients across the country to design the lives they want by integrating their financial resources and human capital. Drawing on his tax and business background as well as his training as a Registered Life Planner, he focuses not only on creating wealth, but finding a healthy balance between money and life

Millennial clients courtesy of Shutterstock.

     

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