When I practiced as a CPA, there were days when I left the office wondering why anyone would ever want to go back tomorrow and do it again. Those days seemed to drag on forever. I did not feel very productive or accomplished, and generally didn't feel good about myself or my chosen career path.

Then there were days when I'd look at the clock and be amazed that it was already 6 p.m., and wonder if I could postpone what was on my desk until tomorrow or perhaps take it home to finish up after putting the kids to bed.

What wasn't clear to me at the time was that there were very specific reasons why some days flew while others dragged. And more often than not, the quality of my day had to do with the clients who visited and the type of work that was consuming me on those given days. When the clients were too small or not fun to be with, work stunk. But when my day was filled with one or more ideal clients working on challenges that were interesting, the day was nirvana, and I wanted more like that.



For some reason, in public accounting, we are trained and conditioned to believe that more is better. Whether it was more hours, higher rates or more clients, many CPAs believe that more is the key to success. I now know that the key to success is more about doing what you love with the right clients, rather than more hours and more clients.

Discovering whether a prospective client is right for you is a combination of art and science, or qualitative and quantitative criteria. These criteria aren't a secret or hidden. It's just that most CPAs give little effort to discovering what criteria are important to them and their firm. Having a minimum fee or pricing lousy clients high and hoping that they soon leave is not an effective way of managing your client base.

To gain a good understanding about whether a prospect is a good client for your firm, you must first understand your client base. Most CPAs know that stratification of the client base is necessary for any well-run business, especially a professional services organization -- yet very few can show the stratification of their client base when I ask to see it.

Before ranking your clients from a quantitative and qualitative perspective, look at your client base for trends that involve lifestyle or enterprise consistency. If you notice that there are a lot of baseball fans or plumbers among your client base, perhaps that particular niche is worth exploring. Many firms have done this for traditional audit and attest services, but fewer have implemented a niche plan for financial planning services. Deepening your exposure or expertise in a particular niche may have long-term benefits as you become known as the expert in that particular area. By now, you may be asking what good developing a lifestyle niche is to your business. If you hold events or like to socialize with your clients, that lifestyle niche can become an important part of the relationship-building process.

When beginning the stratification part, consider stratifying clients in three or four levels. Commonly a "school" system using grades from A through D is adequate. Some practice management consultants will tell you that you only need to define your ideal A+ clients and disregard the rest, but that is not reality for the firm just embarking on this path of defining and attracting more ideal clients. We'll talk more about this later.

For a starting point, consider the top 10-25 percent of your clients today as the firm's A clients. The definition of an A client needs to begin with your current client base reality - and not your dreamy vision of your future ideal client. The balance of your clients should be ranked from B through D, where each level should occupy approximately 25 percent, unless a detailed analysis of your practice leads to a more natural break point that helps define their current stratification.

This stratification effort should be based on both the quantitative and qualitative criteria that are important to you. Some of the more common quantitative criteria include:

  • Gross accounting fees paid to the firm;
  • Realization rate per hour worked;
  • Years that a client has been in business;
  • Longevity as a client;
  • Whether or not the prospect has ever sued a professional services firm;
  • The number of employees (for business clients);
  • Quality of accounting staff;
  • Net worth;
  • Gross income;
  • Interest and dividend income;
  • Gross sales of the client company;
  • Tax bracket; and,
  • Whether the client has employee benefit plans.

This list, obviously, can become quite long. Customize this list to the quantitative criteria that are significant and important to your firm, and then rate each client in each of the important quantitative criteria. Try not to let subjective criteria enter the picture here. These matters should be considered on the facts and circumstances as they currently exist, and not as they may grow to be.
Qualitative criteria are just as important as the quantitative criteria. Some of the more important qualitative criteria include:

  • Paying your firm's bill on time and without complaining or negotiating;
  • Being willing to refer you to other ideal clients;
  • Being fun to spend time with;
  • Clients who appreciate your work and look to you for more guidance; and,
  • Being willing to hire you for more than just telling them what happened last year.

And as with the quantitative criteria, you should include any other qualitative criteria that may be significant and important for your firm.
Both the quantitative and qualitative criteria can and should include any niche specialties that your firm has successfully carved out. This may include:

  • Multi-state issues;
  • International issues;
  • Industry specializations;
  • Location;
  • Type of services that you deliver; and,
  • Special education or CPE requirements needed.


So far, this sounds like a lot of work, and it is. Working on identifying your ideal client may not be billable, but it can save a lot of guessing later. The information discovered from this process becomes the baseline that is necessary for you and whoever else in the firm is responsible for business development - especially when it comes to creating a vibrant wealth management practice alongside your CPA practice.

Once you have the criteria established, and have ranked every client, you are in a position to use this information to benefit your life and your business. First, make a decision regarding how high a new client must score to make it through your new client acquisition process. If you decide that the firm will accept all levels of new clients, you may be asking for trouble. Ask yourself what significant opportunities are provided by new D clients? If you think that you have a good answer, ask the question of your staff.

Unfortunately, adding new D clients becomes counterproductive if the partners and employees want to enjoy every day and grow their business. In fact, one very liberating way to prove to your staff that you'll not be accepting new D clients is to terminate service with your existing D clients or refer them to a firm in which they may be A clients. I am shocked at just how many firms fight me on this, thinking that the tiny margins generated from such clients are worth the aggravation.

At the same time, if we were to poll your A clients, asking if they'd appreciate more time with you, the answer is typically an overwhelming yes. Don't waste time here - find an appropriate solution for your Ds and spend more time with your As. A less painful way than simply firing them may be to find another practitioner who may find them to be an A client, and suggest that these clients use that firm. You need to actually identify the successor firm in advance and reach an agreement on how the transition may occur. Then send a very professional letter to the D clients suggesting that you have found a more attractive service alternative for them, and that you'd be happy to assist with the transition.

Profiling new clients is even more critical when it comes to the wealth management side of your practice. A small client may take as much time as a larger client with far less revenue and opportunity. In fact, it seems that client complaints and problems happen more frequently with smaller D clients than larger A clients. A common mistake that most firms make when they get started in wealth management is to start with the small clients. Their theory is to start where the exposure is less and the work is simpler. A better alternative may be to start with your A clients, who already love you and depend on you for more than just your accounting or tax expertise.

Don't be shy when meeting new prospects for your firm. A big part of their enjoyment in working with your firm will be based on how well they fit your ideal client profile. Ask the questions that you need to ask in the first interview to see if they share your views and fit your profile. It makes the first meeting experience more of a mutual interview than a "sales" meeting where you are simply trying to generate more fees. You may be surprised how liberating it can be to turn down new business because it doesn't meet the criteria of clients that your firm can help. Of course, be professional about it and have a few names of other practitioners who may be able to help them.

The most successful firms are those that have drawn a clear line in the sand about what new clients will look like. It sounds a lot harder to implement than it actually is, which is why most practitioners fail miserably at living by the line-in-the-sand rule. They continue to accept any and all comers whose payment for services will clear the bank.

Setting higher standards for the acceptance of new clients will not change your firm overnight. In fact, the first year may seem a little painful. If your typical year yields 20 new clients ranging from A to D, under the line-in-the-sand theory, you may only net one or two As and one or two Bs in the first year of these new, tougher standards. But if you do it consistently, by the end of the third year, your new client flows will be back up to the old levels of 20 or more - except they'll all be As and Bs. When you get to this point, you are ready to love all of your clients and only work with those who meet your firm's stringent quantitative and qualitative criteria.

John Napolitano, CFP, CPA, PFS, MST, is CEO of U.S. Wealth management (www.uswealthmanagement.com) in Braintree, mass. reach him at (781) 848-2390.

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