Necessity, it is said, is the mother of invention.
So it has been for many CPA firms penetrating new markets and offering new services to replace lost revenue for traditional client niches that have become casualties of the recession, or simply demanded steep discounts.
The prediction that reduced billing rates for standard services will not, inevitably, bounce back to pre-recession levels when the economy picks up adds urgency to the need for innovation. "I'm often hearing from my members that today's fees are the 'new normal,'" said Clarke Price, president and chief executive of the Ohio Society of CPAs.
In the not-too-distant past, Price would ask members how many were paying attention to new service offerings that the largest CPA firms have introduced. "I used to get blank stares. Not any more," he said.
And the change is not always driven by economics. "Some of the older partners who are winding down are looking for doing things that are intellectually stimulating," Price said.
What kinds of things?
One barometer is the growth of the specialty credentials from the American Institute of CPAs. The one most in-demand currently, according to Mark Koziel, who directs the institute's specialized communities and practice management area, is the CFF - Certified in Financial Forensics. About 3,800 CPAs have gained that designation since it was first offered two years ago, Koziel said: "We're already hitting benchmarks we were expected to hit in five years."
Interest in financial forensics isn't simply attributable to fraud on the scope of Bernie Madoff. Shareholder disputes, for example, often demand a level of detective work requiring greater technical expertise than comes from standard CPA training.
But demand for forensic accounting isn't limited to large companies or spectacular frauds.
Koziel offered an example of an engagement involving a family business that could demand the skills not only of the CFF but two other specialty designations: the ABV (Accredited in Business Valuation) and the PFS (Personal Financial Specialist). "Matrimonial disputes can involve the valuation of a business in the settlement, and one spouse is not willing to accept the business valuation at face value," he said.
The only AICPA special designation such an engagement leaves out is the CITP - Certified Information Technology Professional - unless the suspicious spouse is concerned that data systems have been tampered with to falsify financial records.
So far 12,000 AICPA members have picked up these credentials. The largest specialty group, the PFS, has 4,300 credential holders. Offering personal finance services is a natural outgrowth of a standard accounting practice involving personal tax planning and compliance.
"I'm hearing from a lot of our tax members hearing from clients trying to figure out what to do with their 401(k)s that became 201(k)s," quipped Price.
"Our members are seeing a big opportunity out there, usually using tax preparation as a springboard" to provide additional financial counseling services, he added. Relatively few firms are directly providing asset management services, but instead handling investments through a relationship with another firm, Price said.
In addition to expanding a CPA firm's service menu, CPAs who become involved in holistic financial planning tend to find the work highly satisfying. Robin Davey, CPA, of Clifton Park, N.Y., for example, had spent 15 years performing audit and tax work for CPA firms, and several more years in corporate accounting, before plunging into the world of personal financial planning.
In fact, she abandoned public accounting entirely to provide financial planning to individuals and recruit other CPAs to work in association with AXA Advisors, the broker-dealer firm. "This is a lot more fun experience," she said. "Instead of just doing compliance, which is pretty thankless, you are able to help people through all phases of their life."
WAIT - THERE'S MORE
Beyond the realm of personal finance, CPA firms that cater to a small-business clientele are only limited in their potential service operations by their imagination, suggested Jason Lawhorn, CPA, of Lawhorn & Associates in Knoxville, Tenn. Among his firm's offerings: "smarketing" - or smart marketing. "As accountants, we primarily look at cost and expenses and your bottom line," he said. "The marketing piece forces us to look at how to help clients drive total revenues."
"We can provide a SWOT (strengths, weaknesses, opportunities, threats) analysis, and other professional services, to provide a 'holistic' package of services to small-business clients," he said.
Along similar lines, Ohio-based Rea & Associates offers a suite of financial analysis services to those clients who need help to determine what actions and strategies are implied by the financial statements the CPAs help to generate.
The firm also provides Lean Six Sigma training for client company managers, to help them "improve quality and increase process efficiency and capacity," according to Katie Tolin, the firm's marketing director. Interestingly, one sector of the firm's client base - Amish woodworking production facilities - is the most enthusiastic buyer of that service, she said.
The firm has also been successful in developing interest in its small-business advisory services through social media, Tolin said. "Instead of just saying, 'Need an expert? Call us,' social media works through engaging people in a dialog." A blog, for example, might pose the question, "'Are you struggling with cash flow today? Here are 10 ways you can improve it.' It's about sharing and starting a conversation," she said.
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