Sounds like a great marketing idea: Sit down with a prospect and tease them with just enough expertise to whet their taxpaying appetite. And according to a recent practice survey by the National Association of Tax Professionals, more than half (58 percent) of tax preparation firms offer free consultations.

“I generally offer free refund estimates to prospective clients, in addition to answering any tax-related questions,” said preparer Andre Jerry, president of MTG Incorporated Financial Management Services, in Atlanta. “I find that giving free tax advice builds trust and rapport with prospective clients and goes a long way in building a customer loyalty.”

So how come practitioners often feel bilked after these chinwags?

“I found that people would pump me for information and then would do [return prep] themselves,” said San Antonio-based CPA Susana Lozano, who no longer gives free consultations. “One lady kept calling to remind me that she would eventually hire me to do her books and taxes and always followed up with a tax question. After about the fourth time, I told her I could no longer help her. It took me a while to catch on, but in my defense I’d just started my practice and wanted to please potential clients.”

“My standard policy on free consultations has always been, ‘The first hour is free and by then you and I know if we can work together,’” said Martha Nest, an Enrolled Agent at Westview Tax Services in Bardstown, Ky. “In the past, this was no problem. The questions dealt mostly with Schedule As and so forth. But the other day I got a phone call from someone who is not a client saying that I was recommended as an expert. The first question was easy: ‘If I e-mail my paystub, can you tell me if my earnings are too high to claim the American Opportunity Credit for my son’s first year of college?’ Piece of cake. Second part of e-mail was, ‘My wife and I have formed an LLC and I plan to become a “day trader” for the LLC so I can accumulate $22-$25k to start another business. I understand that the LLC will prevent me from paying taxes. Can you tell me how this works?’”

“I refused to answer this,” Nest continued, “and said that the questions were too complicated and that the person needed an appointment for consultation and gave him my rate. Needless to say, I have not heard from him. It has made me rethink my position, however. As of today, I am no longer offering an hour. My answer is now, ‘Ask me the question and I’ll tell you if you need a consultation appointment.’

‘Door prize’

Free chats remain good marketing tools when you use proper controls. “I offer free consultations as I am out promoting my business at chamber meetings and similar networking events,” said Kathleen Fitzpatrick of Padgett Business Services, in Princeton, N.J. “I usually give away a business book with a free consultation as door prizes at the networking meetings that I attend. I don’t have a particular subject limit or time limit, other than it is basic discussion of items that do not require research/investigation on my part.”

Common-sense precautions before the sit-down often head off problems. “They usually just ask basic questions, such as what I’d charge to do their return,” said Deana Parsick of Missouri-based Tax Diva Services and president of that state’s chapter of the National Association of Tax Professionals. “I always have them bring their previous year’s return for reference.”

James Berardi, an EA in San Antonio, gives “one half-hour free consultation and then the client must sign an engagement if they want the service. Sometimes these people will push for more time, however. You must have a fairly strict limit.”

Tips from a recent marketing article in Entrepreneur include:

  • Be very clear what the free consultation involves. Put a time limit on the assessment.
  • When promoting your free consultation in written marketing material, keep the description of your consult short and frame it as a self-assessment tool for the client.
  • A quick assessment is in fact more digestible for potential clients who are still researching preparers.
  • Draw in your customers without giving away so much that they could do what you offer themselves.
  • If you say your consultation will take 10 minutes, don’t let it yawn on to 45 – or even 15.
  • To make your consultation short and effective, develop a rigorous methodology based on your experience evaluating prospects’ needs, so that in 10 minutes you can know whether you can help a prospect.

Some preparers, however, surrender. “I no longer give free advice,” Nest said. “In the future, I’m going to even evaluate questions by my clients and bill accordingly.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access