Art of Accounting: ‘What’s a CD?’

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Early on in my career I met with a widow to review her finances and plan her cash flow after her husband’s death. One of her two daughters was also at every meeting. I knew the husband very well, but had never met his wife or children, and was aware of her being very risk adverse.

During the course of the meetings I kept assuring her of the safety of her money and how a laddered CD portfolio would provide for her cash flow and safety of principal. At the end of the last meeting, she said she understood everything I said, except one thing, and she asked me, “What’s a CD?”

My bad. In my attempt to advise her, I assumed she knew what a bank certificate of deposit was. She did, but to her they were “savings accounts.” It seemed her husband had placed substantial amounts in her name in bank certificates of deposit, and they always referred to them as savings accounts. I learned a valuable lesson. Never assume that the client understands or knows what I am talking about.

Thereafter, no matter whom I met with, or what their level of sophistication was, I always assumed they did not know anything about my areas of expertise and what they engaged me for. With this new assumption I took care to explain what I was talking about or recommending. I developed a way of presenting basic information that did not appear to talk down to them, and that did not take too long, so if they knew what I was talking about, it wouldn’t appear to waste any of their time. If they did not know it, they would learn it in small palatable doses.

Our job as effective advisors is to transfer knowledge to our clients in a way that makes them feel they knew it all along and I am just reinforcing what they know.

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 along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. 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 emendlowitz@withum.com.

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CDs Retirement planning Consulting Ed Mendlowitz