How Most Tax Pros Cheat Clients

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This content is transcribed from the video below.

Learn How the Competition is Cheating Clients, and Get Bigger Retainers.

Well, Hey, Rob Satrom here. It's kind of late. I wanted to do a video because a couple of weeks ago, I had a guy call me because he was going to be starting a tax and accounting firm. He had actually already had a firm that he had built up, and he was down in Mexico. This gentleman was just walking me through how he was making a move to the United States, how he was probably going to be going to Texas. And he wanted to just talk about some advice. It was pretty funny. Most of the time, you accountants, when I'm talking with you, you're very concerned about, "Hey, what designations do I need to do? What kind of LLC? Should I be the professional corporation, or can I just be an LLC? When should it become an S Corp?" Ironically, because you just think about systems, and you think about the technicalities, and you think about features, rather than just really understanding what the bottom line is.

After I answered some of the specific questions, I just stepped back, and I wanted to communicate the bottom line about why I think this outsourced accountant model is so stinking powerful. And it's because you can be a true sheep dog versus a wolf. Now there's that movie out there where the guy ends up being kind of negative. But it basically says that there are three types of people out there. There's the sheep, there's the wolf, and there's this sheep dog. Now sheep are just regular people. They're not sheep by anything they've done. It's not bad to be a sheep, but you are just a person out there. Then you have predatory wolves, people who are trying to take advantage of you, hurt you, rob, steal, whatever, or just take from you. And then you have the sheep dogs that are equipped with the same potential force that a wolf would be, but you work for good. Financial services are the same way.

Now, I think there's three big things that I've seen in the small business industry. So first of all, as a small business owner, I get a million phone calls a day. They're all nonsense. And there are people trying to sell me everything. Whether it's somebody that wants to give me a loan, they want to help me with the PPP program, or if there's somebody that wants to get me business insurance, or they want to do my marketing, whatever it is, I'm hit up nonstop. Part of why I don't call them back is because, in the financial services industry, in particular, there's a couple of types of what I call wolves. And I would encourage you, as an outsourced accountant, you can be a sheep dog in a unique way. And I'm telling you, this is important stuff. If you get this to your bones, you're going to succeed as a CPA.

I just heard this other guy say, "Oh, you guys that encourage people to start your own firm or just parroting each other." No. There might be other people saying the exact same thing about delivering value, about providing more value than a transactional tax return and charging a little bit more for that. I'm sure there are tons of people doing that. But this is because this is what was valuable to the business owners that I intersected with. And this was the business that I saw coming out, as a financial advisor, that I'm like, small businesses need this. In fact, as I was trying to intersect with people, and how I started Nuance Financial, with my two other partners, which has gone goofy, was that I was positioning myself as a financial advisor in order to sell retirement plans.

What I was doing is showing business owners, or 1099 income earners, how they can mitigate their taxes with an S Corp, or with a retirement plan, using a solo 401k, regular 401k, SEP, simple, whatever that is. All of them were like, "Oh, I want to do that someday, Rob. But my accountant doesn't do that. They don't provide proactive tax planning. They don't do anything like that." So out of all that, I found out that as I did more homework to find out what CPAs and tax accountants were really doing, they're not doing anything for them. So business owners have people preying on them. They genuinely do. Particularly in the financial services world.

Let me talk to you about the problems a little bit. And then I'm going to tell you how you get to genuinely overcome that. But, I'm going to tell you how you can do that, and why you can genuinely ask people to pay you a higher monthly retainer than what you're thinking, because you, as an accountant, have this big problem. You think in costs. You always do. It's hardwired in who you are, genuinely. Usually, how you're actually good at your job is you're detail oriented, you're cost oriented, you're so repelled by exaggeration, and salesmanship, and conveying more than what you can deliver on that you don't talk about value. You just talk about costs in general.

But let me talk to you about the big problem.

Business owners have people trying to get something from them.

And in the financial services, there's three wolves out there. You have sheepdogs and you have wolves and you have sheep. Now sheep are just the regular people out there. Out of no account of their own, things happen to them. They're just going about their business. It's not bad to be a sheep. In this instance, business owners are sheep, which they're definitely not sheep. But in this instance, they are. Wolves are those that are predatory. They're trying to get something. And their best interest is not aligned with the sheep. These people aren't trying to be super dishonest and harm them. But they're definitely not for them. Their best interests are not aligned with the customer's best interest. You can be a sheep dog, which, when your best interests are aligned with your clients' best interests, everybody's a winner.

The Financial Services Wolves Trying to Take from Business Owners:

#1- Dishonest Financial Services Reps.

The first kind of financial services wolf out there is the financial representative, or the insurance guy. Now, I'm telling you, there's a lot of these guys that do a lot of good. But in general, the big insurance firms, particularly your financial advisors, if they're financial representatives, and they don't have a lot of diversity in the product that they can actually sell, like what mutual funds, what insurance funds or whatever that is. They tend to have a company whose compensation structure is really geared towards only paying you when you sell giant insurance contracts, giant annuities and giant annuities. It's really about selling giant annuities, which are expensive financial products.

So business owners don't know this, but they might end up working with a financial advisor. Here's what it usually looks like. They have a job for five or six years, maybe seven or eight years. And then in their thirties, they've got 20 to 150, $200,000 in this 401k. They start their own business. They take that 401k. They got a roll it because that's what their investment advisor said to do. And they ended up rolling it into, hopefully not, an insurance product, hopefully not a variable annuity, if they're young. That's expensive. But oftentimes it will even just be an investment account that when you really peer into it, you start finding out that these things have tons of fees in them.

You got to look at the fund fee, the transaction fee, and then the wrap account fee. And when you look at them all, it's a big deal. And if you look at the difference between having a 0.8% cost, and a 1.8% cost, or 2.8% cost, you can say it's negligible, but it's not. It is very serious. So the first type of wolf that is out there is a financial advisor trying to sell products that aren't in the best interest of the customer. But here's the deal, they go around and they help them build wealth. They engage with people. And the way they add value is to help them save, to help them mitigate risk, to get a retirement plan. People need that. And, in a way, it's worth them getting paid to actually have that happen. So I'm telling you, there's a ton of value that they can add to earn that. And we're going to talk about that, how you can align your practice to truly add financial advisor type value.

#2 - Lazy Do-Nothing CPA's and Accountants

Now the second one is CPAs that are too busy doing tax returns to actually pause and give you good advice. This is like a plague. Now they're not intentionally trying to harm people, but they're so busy doing tax returns that they never stop and do a deep analysis to find out what should they do over the next three years to play proactive tax planning. Watch all my videos. You'll see that this is really the big difference. There's usually three big levers people can pull. They can get into real estate, or passive income rental real estate with depreciation and cost segregation, or they can get into retirement and benefits and start messing around with that.

Boy, you get into defined compensation plan with developers, you could put away $250,000 of qualified money a year, and push taxes way out during your high income earning years. Or you can start messing around with your entity type, and owning property in one entity, and shifting them around. It's how Donald Trump didn't pay any taxes folks. It's because he has a good accountant. And the richer you are, the better your accountants usually are. But I tell you what, CPAs and tax people who are too busy doing tax returns to stop and spend the time to add value are really harming their customers. It's not good. And I'm telling you, you should, as an outsourced accountant, this model that I'm talking about, you'll be able to position yourself totally different.

#3 - Slimey Insurance Sales People

Now, the third financial services company that can be a wolf, you got to watch out for them. It's just insurance companies. Insurance, brokers, or insurance salesmen. Now, insurance salesmen, this could be property and casualty. It could be business insurance. It could be whatever. Just long story short, They're usually trying to take a bite out of business owners. Not always, because in the P&C world, or property and casualty, or in the business type insurances, usually they're so competitive and so commoditized that there's not a ton of difference. But what I've found is that, usually, underlying a conversation from a regular insurance broker is something weird and fishy. Not all of them, but you really have to pay attention. Usually your independent insurance reps are going to be the best less dishonest. But, the bottom line is, business owners are getting hit up for all these different things.

How Accountants can Be Different:

But you, you can add stupid amounts of value in this outsourced accountant model. I'm telling you. Here's what you got to do. You got to add value like Dave Ramsey. Help them get out of debt. Help them start moving the financial needle. You need to help them pay their fair share in taxes and not a penny more, not just by being a CFO, but by genuinely diving in and creating a multiyear plan that you can help them mitigate their taxes. You know what too? You got to help them pay their taxes throughout the year so they can end the year without owing a ton of taxes, and not with getting a giant tax return back. Help them maximize their cashflow by paying things in properly for them. And do it through the payroll system. You can save them time and money by doing their payroll, their bookkeeping, and doing everything for them, being a staff alternative. And then you can help them be protected.

Dave Ramsey does this. And I think you guys should too. You should make sure that they have good life insurance. Play the movie forward if they die. Play the movie forward if their spouse dies, if their partner dies. What happens if they have a longterm disability? Genuinely, people getting sick and not being able to work is a bigger deal to an entrepreneur than it is to somebody that just works at a normal corporation, because, usually, they have a high income that's really weird and strange to replace. You don't sell them insurance, but help them understand what's involved in that. Start building relationships with good independent insurance brokers, independent investment advisors. And then I would connect with a CFP, a certified financial planner, that will help them write an actual financial plan.

If you can help them be ready for the time that they don't want to work anymore. And when they want to retire, they're going to be set up right. And I'm telling you, that's huge value that you can add. Now, not every outsourced accountant or CPA is going to feel comfortable doing that. But, I'm telling you, if you act as a Dave Ramsey to help them be financially wise. If you step in and be a partial financial planner, by helping them invest properly, check out the right types of mutual funds, usually index funds from Vanguard or Schwab, or if you help them be prepared with a genuine good retirement plan so that when they retire, they're going to be set up. You're going to add a ton of value. Helping them save in taxes.

If you can act like that. A hybrid between a risk mitigation expert in insurance, a financial planner prepping to build wealth and to be ready for retirement, but looking at insurances too. And if you can help them save taxes, paying their fair share, not a penny more. And then doing those obnoxious things so that you're a staff alternative, that's going to be worth a ton of money to them. They're going to want to pay you a good monthly retainer. And really, for the cost of an employee, it'll work out. So, if you want help crafting a website and digital marketing, particularly using your Google My Business, with a Google ad, and then Bing ads, and then remarketing, so that you can get predictable flow in terms of your CPA and your outsourced accountant leads. We'd love the opportunity to help you. Good luck in everything that you do, folks. And God bless. Keep working hard.All right.

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