In this letter, Id like to address an issue thats received a great deal of press coveragethat is, the smaller CPA firms selling out to chains.
In my opinion, the chains that are buying up CPA firms are not doing so because of the immense profitability of doing personal tax returns, write-up work and compilations. They are buying access to the CPA firms clients to sell them insurance products, mutual funds, and so forth. They are buying, in effect, the reputation that CPAs have toiled to create in this century, and they intend to wring as much profit out of it as they can.
The CPA name has what is called franchise valuethe trust that people have in CPAs. We will witness the using up of the franchise value to enable people to get higher margins peddling products. Eventually, the CPA name will mean no more than that of any salesman or broker with something to sell.
Accounting firms do have to learn new things. They must have intelligent, logical people who can help clients make decisions in a complex, fast-moving and confusing world. That is a challenge we must all face.
However, if people begin to view CPAs as they do any other peddlers, were in for trouble. How would you feel if you found out your doctor got a kickback for prescribing a certain brand of blood pressure medicine for you? You wouldnt have much respect for the impartiality of his advice.
There is more at stake. The complex financial system we have today would be impossible without the reputation for integrity that CPAs now have. It is a shame that it is going to be consumed in an orgy of short-term greed, and that the reputation of the entire profession will have to suffer.
I dont suppose the retired partners of the firms that are selling out to the chains will lose any sleep. After all, everybody else is selling out. Why shouldnt we? Why should those investment bankers, brokers and salesmen make all the money?
My answer is that if you want to be an investment banker or a salesman, just do it. Im going to stay a CPA, and I dont want people cashing in on the CPA reputation to hawk products.
When somebody talks to a sales person, he knows he is getting a pitch. Let the buyer beware. When somebody sits across the table from a CPA and gets advice, he thinks it is impartial. Thats what these chains are buyingthe trust that will help them sell their products. To sell the franchise value of the CPA name will be bad, not only for the CPA profession but for the country and the financial markets as well.
Robert D. Moore, CPA
Jamestown, New York