For decades, CPAs in public practice have laid a foundation of trust with clients by competently handling confidential financial data and performing core services such as tax preparation. Today, forward-thinking CPAs are building on that foundation, expanding their business offerings, nailing down new revenue streams and cementing a more profitable position as their clients’ trusted business adviser (TBA).
“What people really need is a partner … a financial confidante to talk to them about what’s going on in their business,” said Eric Rigby, CPA/PFS/CFF, owner and principal of New Orleans accounting firm Rigby Financial Group. Rigby worked with the AICPA’s Private Companies Practice Section (PCPS) in creating the Trusted Business Advisor 2.0 Workshop, which provides guidance on how CPAs can become trusted advisers to their clients. Using the workshop as a foundation, this article drafts a blueprint for CPAs looking to establish a niche as their clients’ TBA.
Promotion of the CPA as a trusted adviser is one of the 10 main objectives of the CPA Horizons 2025 report released last year (“CPA Horizons 2025: A Road Map for the Future,” JofA, Dec. 2011, page 44). Practitioners and firms that embrace this role—and institutionalize a process to change the dynamic of the CPA-client relationship—will be in the best position to emerge as the future leaders in the profession.
Why seek to become your clients’ most trusted business adviser? There are several reasons.
Improved client relationships. By moving from being a provider of services, such as tax return preparation, to a provider of strategic business advice, such as ideas for doubling the revenue of a client’s company over the next three years, CPAs can develop deeper, more impactful relationships with clients.
Client referrals. CPAs who excel as trusted advisers have a greater opportunity to help steer a client’s business in the right direction. A client with a thriving company is likely to be a happy client who’s eager to recommend the CPA’s work.
A brand-new boost. CPAs who successfully establish business-consulting services as a key part of their practice can use the expanded offerings to help build and promote their brand.
Consistent revenue. CPAs who maintain an advisory role to clients usually serve in that capacity throughout the year, generating a consistent revenue stream, rather than seeing the bulk of the revenue and work during busy season.
Increased profit. The strategic advice that helps a business run and grow builds upon core services such as audit and tax preparation. Clients often are more willing to pay for advisory services than they are for tax returns, which they have to file. As a result, CPAs can generate higher margins on consulting work. “The revenue produced by TBA-type services is less subject to fee pressure …,” said William Pirolli, CPA/CFF/PFS, a partner with Warwick, R.I.-based DiSanto, Priest & Co., “so every project, regardless of size, enhances profitability.”
Personal satisfaction. CPAs who offer high-level advice get to enjoy the satisfaction that comes when their expertise results in significant success for clients. “Somewhere along the line it clicked that we can do more than just tax returns and financial statements, that we have the knowledge to help people with their businesses, and that’s very fulfilling and very gratifying,” said Rigby, who saw a 20% jump in his 17-year-old firm’s revenue after he committed to the TBA role. “It’s the part of my professional life that I love the most.”
A relational change
It might help CPAs to think of a TBA practice as one that grows from the roots of core, traditional services such as tax, audit, and financial reporting. CPAs can expand their role by branching out into advisory services such as strategic planning.
To accomplish this, accounting firms must fundamentally change the way they interact with clients. Traditionally, CPAs contact clients when a due date is looming. The resulting conversation usually revolves around questions such as “What has changed from last year?” or “What’s new since the last time we talked?”
This approach usually convinces clients that their CPA can be trusted with sensitive and confidential business information. Even better, the level of trust established often means that clients gladly would trust their CPA to take on a bigger role in their businesses.
Unfortunately, clients often don’t know about the services their CPA can provide beyond the core work already being done for them. Even worse, clients usually don’t even know to ask about additional knowledge and assistance their CPA can supply.
CPAs can open their clients’ eyes to the possibilities by asking deeper questions—those that bring to light a full picture of the business. What are your long-term goals? What about your business keeps you up at night? Did you know that our accounting firm has the expertise to help you establish and improve your business operations and plan for profitability?
By asking the right questions and listening to the answers, CPAs can identify additional opportunities where they can partner with clients and provide guidance that builds their business and personal wealth while also building trust.
It is neither quick nor easy for an accounting firm to establish a niche as a TBA. Practitioners must dedicate themselves to change and regularly set aside time to modify firm processes and redirect staff thinking. Firm partners and staff members need to think of themselves not just as technical advisers but as strategic partners to clients. CPAs must keep in touch between meetings—lack of accountant contact is a top reason clients change accounting firms, according to a recent CCH survey of accounting firm clients.
In addition, CPAs must overcome fear of change and any doubts they have about whether they possess the skill set necessary to take on an expanded, advisory role.
“CPAs struggle with taking the leap and moving into this new role due to their own internal barriers and a worry that they may not have the capabilities to make such a change,” said Melody Schneider, CPA, a partner at Fairbanks, Alaska-based Schneider & Shilling CPAs LLC. “They want to stay in the comfort zone of a traditional practice.”
Many CPAs are intimidated by the thought of having to add more services. One way to address that issue is for the CPA to build a network of professionals who can enhance the CPA’s service or knowledge base.
“Part of maintaining your role as a client’s trusted business adviser means acting as the client’s quarterback and having a network of professionals to engage when the client’s needs are outside your capabilities,” Pirolli said. “You don’t have to have all the answers; you just need to know where to find them.”
In these situations, such as a business client’s needing legal advice that the CPA doesn’t have the expertise to offer, the CPA acts as a relationship manager, connecting the client with the appropriate specialist in the CPA’s network. The advisers in the CPA’s network—in this case, the attorney—handle billing directly with the client.
CPAs who maintain a solid professional network provide clients a one-stop shop for the services they need without having to take on the expense of retaining additional in-house talent. In addition, TBAs who have a strong professional network are less likely to lose clients to competitors when additional needs arise.
Ready. Set. Go.
The first, and most difficult, step in becoming a TBA is getting started. Pirolli, drawing from his experience in adopting the TBA role, offers some advice.
“One of the easiest ways to step into this trusted business adviser role that I’ve seen is to go back out to the client and have that meeting with them like the very first time you met them,” Pirolli said.
The next step is to take the time to set realistic goals. You cannot expect a majority of your clients to quickly accept you as their TBA. “Not all clients at this particular moment are suited for this particular type of engagement,” Pirolli said, “but at some point in time, probably every client will be in a position to need this service.”
Pirolli started down the TBA path 15 years ago when he set a goal of doing less core accounting work and more consulting work with his clients. Today, he pushes almost all core accounting work down to his staff, while he spends most of his time in new business development and TBA-type engagements.
“I would like to think that at some point I will touch 100% of my business clients in this way,” Pirolli said. “The goal is to select a half-dozen a year and specifically target them. I like to have multiple projects going on at the same time because they can sometimes take over a year or two to complete.”
The six steps
Successful transition into the TBA role requires that you institutionalize a method for this change. Here are six steps for making the transition:
Select: Evaluate your client base and identify receptive candidates. Determine what qualities make a client the right fit for your consulting practice and engage in a client evaluation to determine the best and worst fits based on these characteristics. It is crucial to select the right clients for TBA engagements. The right clients don’t come in any particular industry or size. But it’s often wise to focus on A-list clients and B- and C-list clients that can be moved up to the A list. This also is a good time to cull clients that aren’t the “right fit.” It’s been said that the clients that account for 20% of an accounting firm’s profits tend to consume 80% of the firm’s time. Consider firing those clients that aren’t worth the time they demand.
Initiate: Research the client, conduct the initial consultation, ask probing questions, and listen. Do your homework prior to the initial consultation by visiting the client’s website and social media outlets so that you will be thoroughly informed about the client and his or her business. Conduct due diligence by taking the time to talk with the client and to ask exploratory questions such as “What are your current business concerns?” and “Do you feel as if you offer a competitive advantage?”
Offer: Conduct the proposal meeting and articulate and price your value. Create and deliver a proposal based on the insights gained from the initial consultation. Be prepared to quantify and articulate the engagement details and to discuss pricing options for various levels of service. See sample pricing options in Exhibit 1 (click to open in new window).
Accept: Agree to the engagement. Once there is mutual acceptance of the engagement, finalize the proposal and prepare the engagement letter to incorporate all agreed-upon conditions.
Implement: Execute the engagement and obtain client feedback. Design an action plan for the engagement, including action items, assigned staff members, and target completion dates to track your efforts and gauge your success. Meet and confer regularly with clients to provide status updates and to receive their feedback.
Assess: Conduct an engagement-assessment meeting. After completing the engagement and delivering the result, conduct a face-to-face meeting and engagement review to solicit client feedback on your processes and on the engagement results. After successful completion of the engagement, identify additional opportunities where you can assist the client and continue through the TBA process. Once you have earned the client’s trust, you will be better positioned to win repeat business and to do more lucrative work for the client.
There is no defined pricing method for TBA services. When considering your pricing technique, remind yourself and your clients that you are selling knowledge, not just hours.
Redefining your pricing methodology could transform the way you do business. Here’s a process for doing that:
Assess your value. Estimate the annualized value that a successful engagement outcome would add to the client’s business in cost reduction, time savings, and income generation. In addition, consider the financial effect on the client’s business.
Compare with the client’s perceived value. Determine the value the client assigned to this engagement and analyze how your estimated value compared with the value identified by the client.
Determine a pricing structure. Analyze the data considered previously to arrive at an appropriate price for your services. Take into account the unique knowledge and experience you and your team bring to the engagement. Using this analysis, consider providing three-tiered pricing packages to create service bundles of more than basic products. Three-tier pricing, as illustrated in Exhibit 1, is empowering for both you and your clients, as you can create service offerings and price them appropriately while also allowing clients to choose which offer best fits their needs.
Make a change. Make a difference.
As business becomes more complex and challenging, CPAs have the opportunity to expand their practices by establishing themselves as key business advisers to clients. This role will take on increased importance as clients demand higher-level assistance and technology automates many traditional CPA services. Becoming a trusted business adviser takes commitment, passion, patience, and hard work.
The role will vary and evolve based on the current professional landscape and client needs. The CPA’s traditional role is changing. Can you keep up?
The benefits of becoming a trusted business adviser (TBA) include improved client relationships, a higher likelihood of client referrals, a boost to the CPA’s or firm’s brand, a steadier revenue stream, better profit margins on strategic and advisory work, and personal satisfaction from providing valuable advice and playing a key role in client success.
A TBA practice springs from the roots of core services such as tax and financial reporting. The TBA practice grows by branching out into additional strategic and advisory services.
To become a TBA, CPAs must fundamentally change their relationships with clients. Client contact must be continual and not driven just by due dates. Practitioners should envision themselves as their clients’ strategic partner.
Among the biggest challenges to becoming a TBA are that CPAs must overcome fear of change, must decide on which clients are right fits for this type of relationship, and must understand how to ask clients the right kinds of questions to determine the nature and parameters of the engagement.
Accounting firms and CPAs can set up professional networks to fill any service or knowledge gaps without increasing payroll. Having a network in place makes the CPA firm a one-stop shop for clients and helps prevent them from jumping to competitors that offer services the CPA doesn’t have in-house. The CPA acts as a relationship manager between clients and network professionals, with the professional, say an attorney, handling billing directly with clients.
Practitioners can follow a six-step process to make the transition to trusted business adviser: (1) Evaluate and select receptive client candidates; (2) research the client and set up an initial consultation in which the CPA asks probing questions about the clientfs business; (3) hold a meeting in which the CPA proposes engagement details and a price for services; (4) agree to the engagement; (5) execute the engagement; and (6) hold an engagement-assessment meeting.
TBAs have the option to price based on the value of their knowledge or their hours worked. A tiered-pricing approach can be effective because it gives the client choices and ties levels of service to different pricing points.
Lindsey Ferguson (email@example.com) is a project manager with the AICPA in Durham, N.C.
To comment on this article or to suggest an idea for another article, contact Jeff Drew, senior editor, at firstname.lastname@example.org or 919-402-4056.
- Accountant’s Business Manual (#029418, loose-leaf with CD-ROM toolkit; ABM-XX, online version)
- Becoming a Trusted Business Advisor: How to Add Value, Improve Client Loyalty, and Increase Profits (#090440, paperback; #090440e, ebook)
- Management of an Accounting Practice Handbook (#MAP-XX, online subscription; #090407, loose-leaf)
- You Are the Value: Define Your Worth, Differentiate Your CPA Firm, Own Your Market (#090550)
Practitioners Symposium and TECH+ Conference in partnership with the Association for Accounting Marketing Summit, June 11–13, Las Vegas
For more information or to make a purchase or register, go to cpa2biz.com or call the Institute at 888-777-7077.
Trusted Business Advisor 2.0 Workshop, clientsolutions.cpa2biz.com/Training/index.html
Trusted Business Advisor 2.0 Resource Center, which includes information about the Trusted Business Advisor 2.0 Workshop,
Private Companies Practice Section
The Private Companies Practice Section (PCPS) is a voluntary firm membership section for CPAs that provides member firms with targeted practice management tools and resources, as well as a strong, collective voice within the CPA profession. Visit the PCPS Firm Practice Center at aicpa.org/PCPS.