CPA Alert

The American Institute of Certified Public Accountants chose us for a reason.

By James C. Metzler, CPA

Vice President, Small Firm Interests, American Institute of CPAs

"As I write this, we are taking the first steps out of a worldwide recession that has shaken all sectors of the economy, from the largest banks to the smallest businesses. The clients that CPAs serve are experiencing shrinking demand for their goods and services, disappearing credit lines, large layoffs and severely restricted cash flow. As a result, business owners and families are scrutinizing every expense. They are reevaluating their relationships with their CPA firms and the fees they pay them.   

Sound familiar?  As someone who practiced in a local firm for 32 years, I have experienced more business down cycles than I care to remember. I can't help but reflect on my years in public practice and the challenges we are facing today. What has enabled so many firms to survive and even thrive in tough times? What is it about a firm that makes its clients stick with it even when the competition offers a dramatically lower fee quote? And, once you identify this special quality, how do you use it to your firm's advantage? 

I spent my entire public practice career in "beautiful Buffalo," as Leo Pusateri refers to our mutual hometown. When I met Leo there and learned about his Value LadderTM and related concepts, I saw immediately that they could help my fellow CPAs answer these questions and offer them a workable strategy for better understanding themselves and their clients.

When people choose a CPA firm, they look for technical expertise and quality client service, but you and I both know that there's more involved. Your clients pick and stick with your firm because of the important connection they have made with you. It is a special bond, one that can even span generations, but one we rarely think much about. What does it encompass? Can it be transferred? Can it be taught?  Can it be learned? Is it formed during the first meeting with a client or is it the result of a long history together, hashing out problems and planning for the future?

Those are critical questions for every firm, because winning new clients and holding on to the ones we have are not as easy as they used to be. The consumers of our services are more sophisticated and far more educated about the many choices open to them in the marketplace. As Leo will explain in this book, that's why "winging it"—flying blind into the marketing arena and hoping your clients and potential clients will just get how great you are—doesn't cut it anymore. We're also seeing the emergence of more small firms, all of which are seeking new clients. Once upon a time hanging out a shingle was enough to attract them, but practice development is now a much more complicated task. For new and existing firms, the key goal will be to differentiate themselves from the rest of the pack and make meaningful connections with clients. To do that, we must be able to articulate why we are uniquely qualified to help our clients address their problems and achieve their goals.

It's no longer possible for firm owners to rest on their laurels and wait for new clients to knock on the door. As the most recent PCPS CPA Firm Top Issues Survey found, partner accountability has become a critical issue for many practices. CPA firm owners are expected to bring in new business and expand the services they provide to existing clients. And the old spray-and-pray technique—in which you trot out all your services and hope something catches the client's attention—will no longer work. Clients want to know specifically how you can address their particular needs and what benefit you will bring to the relationship.

To further reinforce the point, consider the fact that we are part of a graying profession, fast approaching an uncertain retirement. Around 71% of AICPA members are over 40 and roughly one-third of our members are 55 or over. That means we are about to see a significant transfer of CPA firm ownership from one generation to the next in the coming decade or so. How well that transfer works depends once again on the connection between practitioners and their clients. In a CPA firm, ownership transfers are traditionally structured with payments made to retiring owners over five to seven years. The retiring CPA's entire payout depends on their successor's ability to retain the firm's clients during that time. However, retaining a client is not a given and usually turns out to be a challenge. That's not too surprising, since CPA firm owners commonly complain that their managers and up-and-coming leaders don't have what it takes to replace them. The problem is not that they lack technical skills or ambition, but that these younger professionals have no experience establishing a meaningful relationship with clients based on mutual trust and respect. If that remains the case, how will this new generation hold on to the business that will cover retiring owners' retirement payouts?

As you can see, there is a compelling case for taking the time to consider the relationship that you and the other members of your firm have with clients. We live in complicated times, but the solution to at least one of our problems is simple. If we can forge and maintain that crucial bond with clients, we have a good chance of keeping them for the long term. But, as Leo says, an effective meeting of the minds depends on a meeting of the hearts. We must understand our clients' needs—and our own value—well enough to see how the two can work together.   

That's why I'm very pleased that PCPS has chosen to publish this book, which adapts Leo's ideas to the issues confronting CPAs. It comes at a time of great economic uncertainty, but its message is timeless: You are the value that binds clients to your firm. And the strategies in this book will help you to articulate and enhance that value."


Please call Leo Pusateri at 716-631-9860 for a confidential discussion and briefing on how we have partnered with the AICPA and provided unique value to the accounting industry.