09 Apr 2020  |  1702

The discussion regarding the future of the profession and the firms of the future is a never ending subject. People are very keen to know the trends and the practices that are going to put them across lines. WBA teams up again with Entigrity and in this episode discuss the approach that the firms must take in terms of practice, marketing and management so that they can remain optimum profitable. Watch the video to understand the approach.




Hosted by:

Shawn Parikh, CEO, Entigrity Offshore Staffing


Philip J Whitman, CPA, President, Whitman Business Advisors

David Wolfskehl, Sr Managing Director, Whitman Business Advisor


Shawn: Hey welcome everyone today on the podcast on how to  build a kickass offshore team, so we are doing this 3rd episode with David and I think Chris is joining in for the first time. Welcome everyone: today's topic is suggested by Phil, and it is, quite often we talk about the firm of the future. And I know one of the platforms which is named after this as ‘the firm of the future’ probably run by quickbooks or intuit. So without taking much time, I would like to call Phil  to come in and give a little background on the topic of conversation.

Phil: Sure, thanks so much John, so I'm really happy to be here with you, Chris and David & me as Senior Managing Director at Whitman Advisory Services. So we're gonna talk about something that's actually very timely. Your CPA firms are feeling a lot of pain right now, with everything going on with this Covid19 & this is something we've been talking about for three years: building the firm of the future and tell us what that really means is building a sustainable CPA firm. A firm that can stand in  weather & storm that we're in right now affirmed its multi disciplinary. So what we're really going to be talking about is the rise of advisory services in CPA firms and how important it is to do much more than just audit and tax work. Okay? and there are so many things, Imean at Whitman Business Advisory we help our CPA firms grow. We have helped CPA firms build additional advisory service offerings and we are here today to advise CPA’s throughout our country about how they too can build the firm of the future & become sustainable by offering advisory services. So you know David, why don't you just know real quickly give an idea. You know people are hearing this, everyone here is into advisory services. Well, if I were a small CPA firm with my head to the grindstone, trying quickly to bang out returns of 415’s &  now do 715’s, there's a little bit of pressure, but I think there's still a lot of pressure. Okay, so David one share what what the hell's an advisory service.

David: So thanks Phil! Some of things that we now see as  advisory services. Many are already providing advisory services, but the way they package it the way they discussed it doesn't lead to higher profitability that sticky mess to the client. So many ways by three services can be things like helping firms from  cost segregation studies to allow their clients to find tax benefits, talk about wealth management that their firms, those retirement conversations they have with their personal clients today about what the future looks like. Firms offering advisory services are gonna look alot different today in the future than today. Phil, why don't you talk about little bit about perhaps some new roles within CPA firms as they create this follow the future, as well as different types of employees that they're going to have and how they can take advantage of the world being black.

Phil: Yeah, absolutely, and thanks for that David, so you know, first and foremost, you know CPA firms in most states  are now allowed to have non CPA firm ownership, I think there are five states that are holding out of New York being one of them. That being said, we've seen firms hire people with titles like Chief Success Officer, you know Chief Revenue Officer, you know a lot of C suite roles coming out of a building advisory services. I saw last week that Price Waterhouse Coppers has a partner that is in charge of crisis consulting so you know I'm sure you can see now the Chief Crisis Officer, you know lots of other companies having challenges and I do believe every adverse situation. If you look at when we had,   Y2K,  the bubble broke, there was a lot of work for CPA firms. You look at the made off scandals & after that it was a lot of work. You know you look at Enron, you know sock advisory services. We've been a very reactive procession and I think getting into advisory services can really be something proactive. Now this recession, we're heading into okay, is going to be wrought with opportunities and we have to race. You know the four letter F word? that people use so much in CPA firms that  four letter F word? ‘Fear’. We see a lot of fear and fear in that marketplace is crippling. You know, we see people okay, we gotta hunker down. Yes, we're hunkering down working differently, but we can't put our heads in the sand. We got to be looking to create these advisory opportunities. I mean we're talking with organizations right now, they're about to embark on launching an advisory service. What is it it's recruiting CFO's controllers, accounting managers, bookkeepers they're, going to help their clients you're, going to help organizations that aren't your clients, so they could be business development opportunities. We've even seen companies that go far, does anybody know a CPA. It's a great salesman. Well, we know a few ,we have a few of them on this call right now.

Shawn: Yeah those are two  unrelated terms, ‘Marketing’ & ‘CPA firms’.

Phil: I don't want to share the joke of you know how you can tell an introverted accountant from an extroverted accountant, but it has something to do with whose shoes. 

Shawn: Well, let me show you one incident,  you know that we all need our accountant right and whenever we; need accountants, we often tell them you know: well, how do you acquire clients and what do you do for marketing and suddenly the face turns to like “uh! Marketing? Sometimes even you know, some people wanted to be aware, they say its is all word of mouth or referrals  & they say it so proudly  that we are getting a lot of referrals because of the great services, instead  they should feel that shame that they are not doing good marketing and they are missing a lot business that is already there out in the market.

Phil: Absolutely Shawn! sure you're so right we have a client when I was going to say they went out and they first engaged in a sales training company to work with their partner group and what they ended up doing. They ended up merging this sales training company into their firm first teaching all the people in the CPA firm how they need to be able to go out there and network and sell, but what client of a CPA firm doesn't sell something. So now they have a new advisory service where they're offering sales training to their clients. Now I want to ask a question: David: why should a firm consider offering advisory services? You know here, I am I, making a good living banging out tax returns doing on it. Why should I consider offering advisory services?

David: So I think there's a number of reasons why Byrne would offer advisory services yeah number one to stay relevant in today's marketplace. Many of their competitors are offering these advisory services. It's important to remain competitive to increase the stickiness of the quiet as an entrepreneur & not a CPA, the biggest complaint that I heard this year, I heard from my entrepreneurial friends about their CPA’s is our history. Teachers. They tell me what happened last year. I need somebody to help me make next year better and so I think the value that they bring to their clients. The profitability of advisory services can also be significant for many firms. She wants to help their clients every CPA, pretty much. They are committed to helping our clients. This is a way to expand how they should. Shawn?

ShawnOne of the things which probably should be considered. Why are you doing it? Why is it ? It is. It's all easier to sell a person who is already a client than finding a new one. Basically, adding you know, I was looking at your presentation. Phil and David you  mentioned most of it, Whether It was budgeting forecasting or whether it was analyzing. Why would he leave transaction or financial planning or you know, also outsource CFO our client accounting services. So Phil & David you know you mentioned about packaging of services or discussion services being not right. I have developed an approach, what I call the ‘Cobra Approach’, for typically my views about small and mid sized accounting, so why? Why is it named ‘Cobra’? This gives a little bit of aggression in terms of marketing in terms of alertness. You know when you're working so that this ‘Cobra’ approach, where C stands for cloud and we all talked about transforming to cloud. ‘O’ stands for offshore staffing team. B stands for Business Development ‘R’ stands for ‘replicate’, & ‘A’ stands for Advisory. We are talking about three three pieces: business development, scalability,  & productising your offerings & services, you don't systematize your operations so that they are scalable and ‘A’ stands for what you are telling at advisory. Let me just go through some quick light on all the three elements: one business development side; I already told you know, that how even a  small firm with 10-20 people get a look at that look at this I mean what you mentioned is very right that you want even a 20  people firm, should have a dedicated business development manager. At the same time, those managers, a senior manager, should be given sales training where you know they're, actually selling to the class will become clients of business development managers. You have a responsibility to add new clients and the manager should have a responsibility of adding more value from the same clients. So, that's, that's, that's something which is not being a part right now, part of most of the small and mid sized CPA agencies. Second thing: I talk about replicability in my ‘cobra’ approach. Well Phil mentioned packaging the solutions, So when we talk about the product vision of your offering people, think about writing your accounting services at $300-$500-$800 a month; it's not just it. Whenever your package or product idea of offering what happens, is first thing, your client perceives that they are gonna get this 12 thing, when they opt-in for your services, So we are dealing with individuals. So delivering tangible value, it's very, very important when you're charging X amount of money. So whenever you productise your offerings, the client knows that its gonna come with this plan. Which I will opt-in, that's on the client side on the operation side, it makes it easier for you, do you don't have a predictable cash flow, predictable costing to it and at the same time it is. You know every time a small phone I have seen over the proctor billing to the clients in small firms, which is so ridiculous. It's an  accountant job,  I mean somebody working in your firm. Why are you doing your own billing? How owners and partners reply is that ‘it’s all in my mind & i know this client for 3 years & i know how to charge them i sometime i charge $150, for some clients i charge $250 & some $350; so the pricing varies and sometimes to have that 5% perfection in terms of pricing & revenue, you’re giving up your 35%-40% of the time. You’ll need to have that productization replicability and scalability. 

One is on the product side and you're, offering cited second design alterations. The system might systematize your business, defining process and work flow & kra’s helps you create business units in your business, so you can create more and more business units to scale it up. Well, the last thing you mentioned about advisory, I can't add much to it. For me it's very simple, one of the most important reasons for advisory services; if i want to start cloud business then i already have more 650+ client in ‘Entigrity’ and i know out of which 300 people will be our clients & i know how much people value, so the first  and foremost thing people say is that you’ll get a bigger piece of the wallet.

Phil: Yeah, just as you said Shwan! By the way I love your ‘ cobra’ acronym, Yes, so you know with advisory services. You know and David mentions this. You know when you're selling something to an existing client they're. Already your raving fan, hopefully, and your trusted adviser as your CPA. It's our belief that if there's any offering you can make to your clients as their trusted advisor they are going to consider, it doesn't necessarily mean that they're gonna buy it, but they're going to consider it and with a hot relationship, there's a high likelihood. You're gonna have a new client in that new advisory. Offering so david if i, a small CPA firm, a midsize, CPA firm, yeah I got my order tax. How do we get started with an advisory service? There's all this talk in the there's all these great niches. How do I get started?

David: That's a great question Phil., Thank you! So I think there's a couple ways that you can get started number 1. Most firms are already partnering with people who are offering advisory services. You can formalize those relationships, you can solidify those relationships and for many firms, you can literally start tomorrow if you want it to go right. So the barrier for entry is much more about year and quitting the time while working on the business. Instead of doing the billing and working in the business, a short walk about, so you can Partner with somebody you can buy your firm, you can build it yourself, but we think for many of the the smaller medium sized birds partner with somebody who you're already working with you get your feet wet to get started within that process is the best solution. John and then we'll leave it up. 

Shawn: I have one more question to ask you and up whenever we suggest this to firm to partner.  There is some level of insecurity, the smaller firms have  that they know if they take away?Am i going to share my client data? I know it's stupid. You know in today's world, but yeah. If you can throw some light on that too.

David: So yeah yes, I, think for many small firms, they're looking at the world in correctly for many small party leaders, what they are looking at, every referral is an opportunity to screw up the relationship and if I referred a year when you don't do a great job now it's going to cause problems for me. If we talk to wealth managers and they've actually done statistics on this for every additional service I offer to acquire they become stickier. So the reality is that year that we talked about is causing people to look at the world incorrectly and looking at them. Looking at these referrals as potentially negative opportunities, instead of opportunities to solidify that relationship with their clients. Now one other point and I know we're coming up on here that we should talk about the firm of the future. Is it advisory services? Certainly a big Easter egg, but I also think that the firm of the future is going to take advantage of the world for this lack. Today, many of these small medium sized firms reflect that community that they happen to live in and that's who their clients are, that's who their employees are, that's who their vendors are. We know this call is certainly a representation at best we're on multiple continents. Your happiest moment, and none of us are in the same room. So the world is flat and I think firms also need to understand that there's opportunities, offshore staffing, Right? and whether the work is being done in India or Idaho or in their office. It really doesn't matter anymore that expertise is also available, whether you're in India Idaho or your office and your clients don't have to be represented by the people of your community, your clients in your marketing and business development opportunities are also worldwide. So when we look at a firm of the future, we look at it by binary services and know advisory services, impacting clients in a much more positive way. Why and we look at that, the world is flat and resources and opportunities are everywhere, and this call just shows the power of that.

PhilAbsolutely! so one of the things I'd like to share before we close you know so in partnering and and by the way we could go very deep into how to build it. How you go about buying at the pros and cons, we're not gonna. Do that. This call: what is it specifically relates to partnering this something at Whitman business advisors that we call the grand slam. We called the grand slam because there's four winners: okay, so you partner with someone and I can tell a story. If I may, we had a client and this client needed to have a transfer pricing study done and you talk about the world being flat. Okay, so they had no way of doing this, so we introduced them to a company that we have a relationship with and they happen to be in Minnesota, okay, so the Minnesota firm did the transfer pricing study & here's What happened; they were able to service that client and reduce the risk of losing that client to affirm that might be able to perform those services in house or if they just call back clients. Sorry, we don't do that. The client could end up somewhere else, then, if it is higher, use the CPA for warrants. Okay, this strategic partner, the company that did the transfer pricing, study they win because they now work with the client that they never would have gotten if they were not part of this program that we have in WBA wins because we were the orchestra conductor. We received a call from Klein and said: I need an axe. I don't do that. Where can I get that in W. B. A. brought in the strategic partner and then at the end of the day there was revenue that was shared by everyone. So we call that our grand slam, we developed something- we call a practice growth multiplier. Well, we've got forty plus strategic partners able at small firms to tap into services that are typically only available at a large firm. So you know David, if you know, perhaps we can leave people with  you know best practices and common mistakes when building, buying or partnering with someone  to offer advisory services.

David: Let me just share a couple of those things number one. You need a vision that this is important right if you want to create a firm of the future like most things right, it's exciting the opportunity is significant, but it's not going to be easy. You need a champion, you need a vision to create this and make it happen right. You need to work on this on a consistent basis and firms who have that vision;  that they want to transform their business, that commitment that they're going to invest resources and many of the resources we're talking about is leadership all right. Those are the ones who will make that transformation and those are the ones who will be riding not only when we get through this, but into the future.Shawn, You want to take this away?

Shawn: Well, I mean I think we had a good discussion Well. Chris would like to have your input summary.

Chris: I‘m curious, someone trying to start out & right  but was there like a top three when it was that or services that clients need that they could give them starting points.

David: So I think yeah what I'll do one and then will you do one right, I think if you have personal tax returns, yeah wealth management yeah? What do I have enough to retire? Do I have enough to send my kids to college? Do I have enough if you have a personal return, that is something that is highly impactful and perhaps the most profitable CPA firm to get it they'll want. Phil, why don’t you share another one ? 

Phil: Sure so what I'd like to share one,  Obviously the demographics in the CPA firm arena. You know lots of baby boomers well, next may, amongst their client base, which means just like you will have a forthcoming transition and succession in public accounting you'll have the same thing on the client side, so exit options for CPA firms, clients. Typically, what we see happening is a CPA firm puts together some financial aid information. It goes off to an investment banker who earns a huge fee for helping the clients sell their business. Cpa firms will end up doing the final tax return and maybe, if they're lucky they'll get the owner of the company to remain as a 10:40 client. But if you're offering these exit options, services, whether you have them in house or you partner with someone, you're gonna, participate in significance, fees and not just lose a client, do a tax return. So this is an advisory area. If you've got a business client base whether you partner with an investment, banking or merchant ship, merchandise, banking, company or business broker, there are opportunities, and you know Shawn & I had shared with you that we have actually are in the ashes of what's going on with everything we have just launched WBA exit options so that we could help our clients help their clients. So you know we view ourselves at Whitman business advisors as the trusted adviser to the trusted advisers. We're here to help firms expand in areas other than. Traditional tax & audit, &  it's our belief, the firm of the future will be multi disciplinary and will look more like a consulting organization that becomes a one stop service and value provider to their clients.

Shawn: Well, Phil; I think especially for the David you mentioned about You already have articulated what are the 40, so this is that you can add your existing practices in 30-40 services, so you have people who can partner with so which adds a lot more credibility that you don't make make sure that you'll make money out of. So yeah I think a CPA firm should look at this with much open eyes & ears especially in times  like (covid) right now, where you need to have that sticking with you for your client and multiple streams of revenue. It might still happen, when i was  talking to a few of my clients and they're saying you know what next month, we're not gonna have any revenue, accounting division. Why you know there's no accounting & the businesses are shutting down. There is no PO’s  system which is swiping a credit card so practically there's not nothing to capture.   Especially some of the clients who are in restaurant business, so yeah it is, it is impacting. It is all the more important right now to focus on what we called as advisory services are becoming the future, and it's not the future it’s now. With that said, I think we had a great conversation today. Thank you. Everyone for joining in the podcast and I think we had a very good conversation. I think we will do some more podcasts in the future, this is the time you know you should be recording our stuff working from home.

Everyone: Thank you for joining the podcast. 


About The Author
Senior Vice President

Mike is a CPA and has over 30 years of experience in thought leadership and mentoring. His experience and constant efforts in solving prevalent issues of accounting industry is his biggest stand out point. He has been instrumental in mentoring scores of entrepreneurial accounting and finance professionals to get up on their feet and convert their practices into successful ones. He has authored a book called 'Principles of High Performance Leadership'

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