The biggest reason we hear from clients that they are moving tax advisors is because their tax accountants were nonresponsive, reactive, or only deadline driven. I am sure this is a story that everyone hears on discovery calls for tax services. Talking to clients less than quarterly makes them reactive. Not answering phone calls makes them reactive. Not responding to emails makes them reactive. I say this to make a point – reactive behavior is rampant in the profession.
So, why is this such a widespread issue – still? I have a few theories. But first, let’s jump into what being a proactive advisor means.
Proactive advisors schedule a minimum of quarterly hourly check-ins with their clients. Quarterly conversations ensure that professionals know what is going on in their clients’ lives and businesses. This knowledge will spark tax planning ideas and lead to interesting conversations with clients about tax advantageous decisions. Many tax advisors have pushed back on this concept saying it’s extra work for no pay. That is a fair point, however, charge for it. We do a monthly fee anywhere from $50-$500/month depending on the complexity of the return group, the analysis that will go into the meetings, and the number and length of those meetings. That fee covers planning, estimates, conversations, and structured tax advisory. It does not include on-demand meetings or excess tax scenario planning than our initial scope. It is important to lay out expectations and boundaries and price it well up front.
Tax advisors attend CPE all the time. We fundamentally have a million ideas running around in our brains. However, we often do not communicate how those ideas might make a difference before we are reviewing the tax return. Clients love getting notes saying – I just read this article, or I went to this training and here are the slides, or I thought of your growing business when I saw this. Yes, your role as tax advisor lends itself to send tax related information. However, it does not need to be all tax! You might have a client with a messy mile logbook and decide to send them something information on MileIQ.
And yes, I am telling you things that you already know. I frequently hear that tax has been commoditized and therefor the pricing sensitivity in the market pushes people to be reactive due to not enough resources to be proactive. My response – fix it. Take back the service side of the business and show your clients why you are worth the extra fee. The tax law has been changing consistently for years now and is getting more and more convoluted. Clients understand that yet they do not understand increasing fees? I think it is more likely that the conversations have been avoided and that the market rates are being set by reactive tax preparers that are going for volume. If we all focus on bringing the service back to the clients that are not just hunting for a budget prep job – we will influence the perception and the market readiness to accept planning fees.
Our costs for compliance have also increased while qualified labor is difficult to find. This is a real situation that many tax accountants are in – having to take on more clients to make margins without being able to afford help. Some of this goes back to pricing and some of it goes to talent development and talent shortage. However, if good advisors are lacking in the employment arena, they are certainly lacking in the market. What I mean is, we have the upper hand here. The demand for good service is higher than the supply available and we are in a unique position to say no to clients that do not align.
I, for one, will make the pledge to charge fair prices to my clients for the expertise and value of the services we provide to them. Our team is consistently staying ahead of the curve and partnering deeply with clients to overperform on expectations with tax planning. I know this is possible because I see if happening every day. I am hopeful that in the future not every single one of our prospect discovery calls will start with “Well, my current CPA doesn’t return my phone calls timely.”