Imagine a plane that is about to take off. On the plane are a client's financial advisors. Who is in the pilot's seat? Who is in the co-pilot's seat? Who is in first class and who is in coach? These are questions CPAs should ask themselves in today's commoditized and competitive world.Most clients have a team of advisors and the size of the team is growing. Clients often look to multiple advisors within a firm, as well as to those on the outside.
Many CPAs point out the fact that accountants are the most trusted business advisors based upon past and recent surveys. Accountants may be the most trusted, but are they the most influential? Are they the primary business advisor that sits in the pilot's seat or acts as the "head coach?"
The answer to this question will determine which seat on the plane the CPA occupies and if your firm owns the plane. What seats will the banker, attorney, financial planner, brokers (no one has just one!), doctors, insurance agents and all the rest occupy on the plane?
Some advisors are one-time or infrequently consulted, while others are advisors for life. CPAs currently sit in an enviable position, but if they don't start utilizing technology to their advantage, they will be forced out of the cockpit and into first class or perhaps even coach.
Many of you are thinking, "I know more about my clients than any of the other advisors." My response is, "It doesn't matter." You are at risk if you don't employ technology that is available, affordable and will assist you in becoming the primary advisor as well as the most trusted advisor.
If you don't wake up, bankers, financial planners and even insurance agents are going to control the client's "electronic safety deposit box." Some may say, "So what? It is only an electronic document depository." Wrong! It is far more, and once clients see it, they want it and are willing to pay an annual fee for it, just like they have done for years with their old safe deposit box.
The good news is they don't have to go to the bank to access it. It is secure. They no longer have to rely on insecure e-mail to transfer documents. And best of all, they can automatically aggregate information from all of their advisors into one location. Other advisors can also have access (with the primary advisor's permission).
What I have just described is a portal, and firms should learn about hosting options, availability, cost and how to market them to their existing clients before other advisors take control.
Accountants need to know the difference between a portal and a content management system. Content management systems tend to manage documents, records, e-mail and knowledge, and are primarily for the use of the firm. These systems can be housed internally or in an application service provider model. They are expensive to implement and require considerable change and discipline within the firm.
Portals, on the other hand, are relatively inexpensive, easier to manage and allow secure access by other advisors and guests (i.e., children who have authorization or mortgage lenders who want copies of a tax return). They are typically hosted at a secure site. When clients post documents, the primary advisor (or any advisor the client selects to see the document) is notified by e-mail and can view the document on the portal. The advisor can move the document from a transmittal file folder to standard folders for tax, accounting, insurance, legal, medical, etc.
Advisors can also post documents to the portal. When advisors post documents, they can make them viewable only by the client, by one or more other advisors, or by a guest such as a guardian. This is a much more secure process than e-mailing Adobe PDF or Microsoft Office documents. Think about having the past three years of tax returns available on the portal for the client to access at any time and from any computer with an Internet connection. From an audit perspective, clients can post and access documents in a secure environment.
Think about clients posting their QuickBooks or Quicken files to the portal. The accountant downloads them for preparation of the tax return and financial statement, and then posts the tax return, financial statements and related files back to the portal. Automatic e-mail notification (without a file attached) is handled by the system. If the client wants their banker or insurance agent to see their tax return, they can make those documents available on the portal and send the advisors an e-mail.
By now you should have the picture, even though I am sure you still have questions. Some of your questions are, how much does this cost and will the clients use the service? They will use the service if you advise them to use it.
The cost of the portal can range from approximately $3 per month per client to hundreds of dollars per year, depending on the hosting, storage capacity and aggregation services offered. Most firms will find solutions available that start at $3 to $5 per client per month. The actual cost will also be determined by client volume.
The good news is that clients and advisors will pay to participate. This can be a revenue stream, as well as putting you and your firm in the pilot's seat. At a break-even, the firm will improve its client service and security, and save on postage, supplies and time.
The action steps that firms should take are:
1. Name a task force of two to five people (from administration, tax, A&A and IT).
2. Determine the top objectives, such as tax returns, insurance, wills and trusts, and brokerage accounts.
3. Identify clients who will value this service (at least 100).
4. Develop your model.
5. Select a vendor.
6. Prepare marketing and training materials.
7. Integrate with your Web site.
8. Implement a pilot project.
This can all be accomplished before the next busy season, but you should get started now. Clients will value the service, and it will provide a secure environment for transferring information among the client, the CPA and other advisors.
And by the way, in January, Commerce Bancorp acquired eMoney Advisors. They are serious about offering portals to bank customers and financial planners. You had better act soon, or your local bank will not only own the plane, but will be trying to put their pilot in the captain's seat.
L. Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
