Open Portals, Open Data?

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Sean Manning spent thousands of dollars each year mailing financial statements of up to 50 pages to his monthly accounting clients, and he wasn't even sure they wanted the information. So he decided to conduct an experiment. The president of Colorado-based Manning & Co. reduced the mailings to a brief summary with a note informing clients that if they wanted more details, he would make those available online via a password-protected client portal. All clients had to do was verify their email addresses.

"Ten percent of clients called asking for access," Manning said. "The other clients didn't even look at it."

Although clients were slow to catch on to the concept of logging on to a secure site to access all their financial information from their CPA, a process many are already familiar with in online banking, more are signing up each month - and saving Manning significant bucks in the process.

Partner Insights

Citing cost and time savings, security, and the ability to access information from outside the office even during natural disasters, vendors are pushing such Web-based products as a means for financial professionals to build their businesses and better serve even their less tech-savvy clients. CSI, which entered the portal market six years ago, was joined by CCH in 2004, and most recently in November by Ceridian, whose CPA Client Connection and SecureSpace offer similar sharing and storage functionality.

Meanwhile, Microsoft last fall dropped the word "portal" from its Office SharePoint Server as it extended its capabilities beyond document management to include business intelligence and process management.

However, most observers agree accounting professionals are uncertain why they should invest in yet another new technology. But vendors hope success stories like Manning's will attract interest.

In 2003, before purchasing Creative Solutions' NetClient CS product, Manning's annual billable revenue was $700,000, and he spent $10,000 on postage. In 2004, revenue reached $1.2 million, while postage costs soared to $17,000. Introducing portals cut postage costs to $14,000 in 2005 while revenue continued upward to $1.1 million; and in 2006, an estimated $1.2 million was expected to cost less than $12,000.

Taking into account preprinted envelopes and printing costs roughly doubles those savings, totaling $600 to $1,000 per month, or $3 to $5 per client per month. He realizes additional annual savings from his roughly 500 tax clients, who can access their returns through CSI's UltraTax/1040 Portals, which are for storage of 1040 only.

"We're aggressively transitioning their accounting software to the portal," Manning says. "Most accountants are afraid to tell their clients what to do. We tell them this is the way it's going to be, and if they have a problem with it, let us know and we can accommodate them."

Manning is not the sole beneficiary.

Gaining Momentum

In December, Creative Solutions announced it had surpassed 100,000 client portals, a 50 percent increase over portal usage for 2005. These include NetClient CS, UltraTax/1040 Portals, NetStaff CS (for professional staff to communicate and access firm documents and software), and Web Employee (an intranet to access paycheck stubs and track vacation time).

"Think of all the things a typical small business does interacting with accounting firms daily, weekly, monthly, all modularized so you only have the portlets you need to interact with them," says Teresa Mackintosh, vice president of marketing for Creative Solutions.

"A tremendous amount of time is spent redelivering information to your clients (because) their 'dog ate it.' They're notorious for losing documents that you're not getting to bill for. It's your time and your administrator's time (think hourly wages)." When accountants launch portals, Mackintosh continues, "[customers] feel served and ironically you've spent less time and less money."

NetClient requires a $250 setup cost, $50 per month for the firm license, plus $5 per month per login. "People have asked for a flat fee, but so far, we haven't felt inclined to do so because their profitability and productivity both rise with every portal they add," Mackintosh says.

UltraTax/1040 Portals, introduced in December 2004, costs each practitioner $1,500 per year for an unlimited number of clients. CPAs looking to test the waters can do so for $5 per client per year, even just experimenting with a single portal. They include an electronic Web organizer that, once filled out by a client, can electronically be pulled into UltraTax with no rekeying. So far, these organizers yield 30 percent completion rates, compared to 10 percent of those mailed, and Mackintosh expects that number to increase as portals gain popularity.

The question is-when will that happen?

If You Build It, Will They Come?

When Creative Solutions introduced NetClient in 2001, "we were ahead of the technology curve, but it's given us a lot of time to refine it," Mackintosh acknowledges.

In November 2000, Intuit introduced Private Client Sites, described as "personalized, password-protected Web sites (that) allow accountants to post and retrieve current and archived client files, such as tax returns, tax receipts, (and) financial statements." ProSeries customers could link the Private Client Sites to the ProSeries Web Organizer, and then automatically download clients' responses into the tax preparation software.

Sounds familiar now, but the company quickly pulled the offering back because of lack of demand.

Several industry innovators who have made use of portals indicate that the biggest resistance by other accountants stems from the claim that their clients aren't asking for them. And whatever the attitude, concern over security and privacy may force the issue.

Jim Bourke became so concerned about regulations regarding email attachments potentially violating privacy policies that the partner-in-charge of technology for WithumSmith+Brown introduced portals to his clients smack in the middle of tax season last February.

The Red Bank, N.J.-based firm had been sending financial statements, tax returns, and wage information over email, but decided it would be safer to let clients access information that WithumSmith already had stored in its GoFileRoom document management system, in some cases for nearly five years.

"We're opening the door to our document management system for our clients," Bourke says. "They're no longer waiting for people who are outside of the office to access the information."

A key decision was making sure executives supported the effort. The firm held a "lunch and learn" with senior management across six New Jersey offices, teaching them how to sell it and talk to their clients about it.

"I said, 'Let's be at the forefront of this whole issue,' and all the partners bought into it," Bourke recalls.

Clients are now asking whether the firm will house their payroll and other financial information on its servers, and WithumSmith is considering doing so for a minimum fee-it is currently offering the portals as a courtesy service.

When the company meets with new prospects, Bourke tells them their proposals will be available via the client portal, not in a binder. It's a way of introducing them to the new technology and serves as a talking point.

While few firms have implemented a client portal, Bourke says, "Over the next six to nine months, secure emails and client portals will be the only way to communicate (because of legislation). People will be scrambling to do it."

Driving the Plane

Deciding to take action before necessary will not only better prepare CPAs, but could also give them a strategic advantage in building business with their current customers, who surely have relationships with other financial professionals.

There's a difference between being a trusted adviser and the primary adviser, explains Gary Boomer, CEO of Boomer Consulting. If he sets it up correctly, the CPA who creates the portal can allow access to other advisers, providing mortgage lenders and bankers with a password to the site to get copies of restricted financial information selected by the primary adviser. Access also can be granted to authorized "guests," including kin.

Companies like Yodlee and eMoney Advisor already serve as aggregation sites to gather information on customer accounts residing in multiple institutions. Local banks will follow within the year, Boomer believes, leaving the late adopters in the dust. In his November 2006 newsletter, "Portals-Now is the Time," Boomer notes that he has heard firms talk about portals for the past two years, but few (around 5 percent) actually have implemented them or developed an economic model that makes sense.

"Clients aren't going to want five or six different portals. By controlling the portal, advisers position themselves in the pilot's seat when it comes to delivering financial services. Other advisers may find a place in first class, but many will fly coach," he says. "In technology, what you don't know you don't know costs you a lot of money."

The more innovative a firm is, the more they can benefit. It's not prohibitive to charge clients a few hundred dollars for this service, Boomer suggests, adding that some financial advisers already are charging $1,000 or more to access everything from W-2s to wills in one electronic safety deposit box through aggregation sites.

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