Art of Accounting: More on being a generalist
My two columns in January on having a firm specialty of being a generalist have generated considerable comments and emails to me.
How does the generalist grow?
The generalist will grow by the increase in range of experience they acquire, the number of clients they handle and staff supervised, the total fees collected, the realization, the speed of fee collections, the growth of the clients, clients that need additional services, client referrals, the regard of their peers toward them and the trust earned by the generalist from the clients and partners.
What value does the generalist add to the practice?
The generalist will permit the firm to accept almost every client referred to it. This book of business can create a firm within a firm. With a critical mass of small clients, the generalist can develop standardized procedures that can reduce the cost of delivering the services. Without the generalist the firm would accept some of these clients and most likely “lose” money on them. An alternative to accepting these clients would be to refer them to smaller practitioners who at some point could refer larger clients to the bigger firm, establishing a referral chain. The latter is not a bad model either, but I think the generalist department would serve the firm better.
What marketing benefits are there to the firm?
This niche, like any other niche or specialty, can make new business development easier. However it will only work if the services are promoted and the department head becomes a champion of the services within and outside the firm. With an established staff and client base establishing the firm as an industry leader, marketing could be better focused and directed.
How can referrals to specialists within the firm be generated?
The generalist would call on firm specialists. This requires the generalist knowing the firm’s partners, senior managers, niche leaders, and their expertise and responsiveness to the generalist when a referral is directed to them. The generalist also needs to have a thorough familiarity with the firm’s clients and the types of services performed for them.
How would this department be named?
I do not like the name “Small Business” department because many clients either do not think of themselves as small or feel they will be pigeonholed in a department that would provide abbreviated services. Perhaps “Family Owned” or “Closely Held” business department would work. Another problem with the name is that a lot of smaller not-for-profits would also be handled in this department. (Hey, I just provided two very long columns and this follow-up; you come up with the name. And, then let me know.) Another thought is that the name could be used internally and not communicated to the clients and public. However, the names do get out, so watch what you call it.
Family Office and Business Services Department, or Business and Organizational Services Department, Tax and Accounting Services Department, and Accounting and Tax Services Department are some other names that come to mind.
Some comments I am sharing
From a friend:
“I, too, consider myself an ‘expert generalist’ and have built a great career being that. Some people will say, ‘jack of all trades, master of none.’ OK, but at least I know how to apply the ‘smell test’ to most problems. And, a little specialization here and there never hurts.”
Comment from Going Concern blog:
“These days, the conventional wisdom is that accounting professionals need a specialization. The idea is that by demonstrating an expertise, a person can provide far more value and credibility. ‘If you needed brain surgery, would you rather have general surgeon or a brain surgeon perform the procedure?’ is a common thing the pro-expert will say. Here's a column from Ed Mendlowitz making the case for ‘expert generalists,’ citing his own experience…”
Here is a link to the rest of the Going Concern post:
Here’s the response I posted on that site:
“I believe these comments miss the point. Anyone needing a brain surgeon should definitely have a specialist perform that work. However, many people go about their lives with minor complaints of headaches or occasional dizzy spells and do not go to a brain surgeon —they go to their internist or an urgent care center. Sometimes the problem is they need better eyeglasses; have blocked eardrums; a breathing problem; wrong medication; and sometimes they need to see a heart or brain specialist. The doctor of first report should be able to diagnose the problem or certainly rule out certain issues. If the problem turns out to be something not as serious, it would be treated then and there. If the signs point to an unrecognized problem or toward a cardiologist or brain expert, that would be recommended. The same is so with many smaller accounting clients. Clients go about their business. Most have a single person who is their trusted advisor. This is so even if they are clients of a very large firm. My experience is that most problems are easily solved and handled by someone like me. However, there have been many instances beyond my expertise such as a forensic investigation in a divorce, a complicated due diligence in an acquisition, an audit of a construction contractor, an accounting systems installation or in some cases an estate plan. I have enough knowledge to recognize these issues and to advise the client preliminarily. If it reached a stage where an expert was needed I would refer someone—either from my firm or elsewhere. I never attempted to do work that I was not qualified to perform. Additionally, problems arise with clients all the time. Many times the client describes them in an inaccurate or inarticulate manner. Part of our expertise is to help the client recognize the core of the problem and then we either work out ways of handling it or refer a specialist. I can provide many examples of each instance, but for now, I think my point has been made. Here is a further comment about a patient with a heart problem going to a brain surgeon. If the brain surgeon rules out a brain problem, would they recognize the heart issue better than the internist? I believe the internist would do a better job of diagnosing the problem.”
Comment from Spiro Leunes, one of my partners:
“An area where an ‘expert generalist’ is definitely needed is in the outsourced CFO services niche. With enough of the right clients the expert generalist could be a superstar. This person can work with a company just getting started or an offshore company looking to set up shop in the U.S. The expert generalist will know what must be in place to set up shop (insurance, payroll, HR, retirement plans, etc.). I also think that if the expert generalist can reach out to the firm’s international affiliates and notify them that we are able to provide this service, additional services will be referred.
“As an expert generalist myself, I was faced with many questions and it also helped me develop the ability to ‘cross sell.’ If my client needed a bank, I had someone. An attorney? No problem. An actuary? I got you covered. In small firms being a generalist is an essential quality. In larger firms the ability to identify client issues and provide clients with an internal solution can make the expert generalist extremely valuable. The client’s problems can be solved, growth could ensue, and it could result in additional business to the firm. Cross-selling is very important as firms grow and become niche oriented. Being an ‘expert generalist’ is important for the firm and an important niche service to many smaller clients.”
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or email@example.com.