Adopting Advisory Services Through Compliance

CPAs have regularly been told to invest more into advisory services for their clients, but for many firms, this “call to advise” goes in one ear and out the other. Not because firms don’t see the value, but because they don’t see a feasible avenue to do so.

Many tax-focused firms are already overworked, so adding more work seems like a bad idea, and adopting CAS or concierge services likely means bringing in more staff, which also isn’t ideal because of how many resources that takes up. So, they choose to stay focused on their services.

For tax firms that means compliance. However, I believe one of the key errors the “Transition to Advisory Services” narrative makes is pitting it against compliance services.

Simply Google the subject and you will find countless articles discussing the need to move “away” from compliance and towards advisory. But the truth of the matter is that CPAs can’t move away from compliance. 

Compliance is key for their client’s success. If you invest in a proactive relationship with your clients and advise them through the year, but at the end of the day you don’t help them comply and they owe more than expected on taxes, “but I became an advisor to you” won’t stop that client from walking out the door.

In the last year, the demand for advisory services has grown and the need for PPP loans was case and point on this matter. Businesses needed funding and many CPAs helped them secure that, as well as account for it correctly on their balance sheets. They also helped them ensure that those loans got forgive. And how did they help them, by ensuring that those businesses were in compliance to the set rules.  

At my firm, our tech allowed us to track a client’s PPP loan from the point of deposit. After that, we could track their expenditures and make sure they were spending the funding on the correct items at the correct time.

Our clients got loans and our clients got those loans forgiven all because we helped them comply with the rules. However, we didn’t just make sure they followed the rules, but had active discussions about the activity and helped our clients make the right decisions throughout the process.

For us to effectively adapt to this advisory role, compliance needed to play a key part in it. So, seeking out advisory services but feel bogged down by compliance or overwhelmed by how to decide which services to adopt should look towards their compliance services as an opportunity to advise.

It could look like incorporating more tax planning in your client engagements or quarterly meetings or mid-year tax plans. Instead of offering this as a one off, make it a standard service for all the returns you do.

Help clients look for the errors that they may commonly make. Things like penalties, gifts, entertainment, are things that every client makes mistakes about. Start engaging with your clients throughout the year to help them catch those mistakes. And helping them catch those mistakes will help you get the return processed more quickly after year end.

However, there is a truth in all of the “compliance-to-advisory” articles that can’t be overlooked and that is investing in cloud solutions is essential in this no matter what. The power that the cloud gives you is more readily accessible data where CPAs are less reliant on their clients to gather data.

CPAs can typically spend over 40 percent of their time simply gathering client data, collecting and sorting the information you need in order to work and advise. Invest in solutions that make that processes easier.

At my firm, our technology automates this process by gathering all of our client data every night, and then creates alerts around activities that we can then advise on. Most of it is compliance related – things like I mentioned before; meals, gifts, penalties, etc.

One advantage to CPAs is that they know the rules that clients need to comply by, and the ways that clients can comply while saving money on taxes. Engaging with your clients actively and helping them make these types of decisions is a key way we can begin to advise especially in areas that we have confidence and knowledge in.

Through investing in technology and helping your clients know what mistakes to avoid in order to be better prepared for tax filings and compliance, you will ultimately help your firm save time in other areas. Spending less time gathering and cleaning up client data opens up more time to begin to learn how to add the other advisory services that you may want to add into your service package.

You can also choose to use that time to grow your firm and bring in more clients who are looking for proactive tax advice from their CPA. Or you can take the time savings and work less, which would be good for a lot of us to do.

• The truth is this: Your clients want and need advice.
• The myth is this: Compliance work is antithetical to advisory work.

Learn to marry your strengths as a firm into an advisory relationship with your clients. Don’t stress about doing things you do not do. Compliance services are an avenue into advising your clients on how to run a better business and add value to your client relationships.