Management guru Peter Drucker once said that the most important question companies should ask themselves is: “What do our customers [clients] value most?” But, Drucker said it’s the question companies tend to ask least, because they think they already know the answer.
From a CPA’s perspective, the thing your clients value most is not a spreadsheet, financial statement or tax return; it’s the clarity you give them that helps them make better financial decisions. As Warren Buffet likes to say, “Price is what you pay. Value is what you get.”
Now let’s take it a step further: Suppose you thought of yourself as a Personal CFO and your clients were the CEO you reported to. They could be the CEO of a large corporation, the CEO of their own company or the CEO of their family, i.e., Family, Inc. Whatever the case, if you were reporting to a CFO, you wouldn’t be wasting their time on financial minutiae such as the details of tax reform, updated depreciation schedules or how much you know about the tax code. You’d be giving them the big picture of their current financial situation and telling them which resources to leverage in order to reach their short-term and long-term goals.
Helping the CEO of Family, Inc.
Whether heading a family business or simply heading Family, Inc., the CEO sets the company’s (or family’s) direction with their vision and their values. They decide how to allocate resources to keep their company or family moving in the right direction. They make the tough decisions. They focus on high-level matters. They’re not deep in the weeds with controller-level details because they’re too busy and it’s not a good use of their time.
Again, the priorities are the same for the CEO of Family, Inc. as they are for the CEO of a company:
• Setting the vision;
• Setting the values;
• Managing the resources;
• Making decisions;
• Delegating the rest.
How client meetings change when it’s between CEO and CFO
To say CEOs are busy is an understatement; they don’t have the time or patience for “just touching base” or random “check-ins.” They want an agenda. “Why am I here? What’s the purpose of this call or meeting?”
If you’re meeting quarterly with your client/CEO, you may not need as robust a review or as much prep work as you would for a semi-annual or annual meeting. But, if you’re meeting less frequently than quarterly, you don’t just want to be doing a light check-in because you’re going to miss critical issues that affect your client’s ability to make smart financial decisions.
If you’re the CFO of a company, you don’t just wing it or make small talk when meeting with the CEO. Same goes for your client. Put in the prep time, have a solid agenda, and stick to it to make sure you both come away from the meeting with actionable next steps.
CEOs don’t look to their CFOs for numbers per se—that’s the controller’s job. The CFO’s job is to interpret what those numbers mean and to explain them in a context that a busy CEO can understand quickly to make confident decisions. In a nutshell, the Personal CFO’s job is to free up the client/CEO’s mind so he or she can focus on the big picture to take care of their family and live life to its fullest.
Where are you now? Where do you want to go? What do we need to get you there?
Identify those three questions above with your client/CEO. They need clear, relevant numbers that help them sleep better at night—they don’t need the financial minutiae. They’re not impressed by how much you know about accounting standards. They just want to know if they’re on track (or off-track) in their business or personal finances. And, if they’re off-track, they need to how to course-correct themselves.
Anticipating client needs before they ask
Being the CEO’s financial consigliore changes the way you operate. Now you’re the “expert in your client,” not just the expert in accounting. All kinds of specialized financial experts can be brought in to help your client as needed, but as the expert in the client, the Personal CFO is the one who’s best equipped to coordinate the efforts of all the outside experts working on their client/CEO’s behalf.
Now, you can’t provide this kind of “concierge” service to all your clients at first. Start with your best clients—the ones you like working with the most. Become the “expert in those clients” so you can start anticipating what they need before they have to ask you. That’s what a great concierge or Personal CFO does. Before you know it, your best clients will start referring you to other clients who are very similar to them in terms of assets, goals and needs.
A very successful couple was referred to us recently. They were nice people—modest about their accomplishments—and had substantial holdings and complexity. Their prior CPA just did their taxes. There was plenty of tax complexity in their lives, which I’m sure their former CPA enjoyed, but that was the extent of their relationship. They needed more.
So, I asked the couple, “What’s the most valuable thing we can do for you? How can we make your life easier?” They thought for a second and told me there were two things they really needed help with: (1) cash flow management and (2) creating a planned giving strategy since they wanted to tithe 10 percent of their income. The challenge was that they couldn’t easily calculate their 10-percent commitment because they didn’t know how much all of their disparate investments were generating or what their income really was.
In response, we created a structure in which they could get a better handle on their monthly incomes and expenses (i.e., cash flow) and also donate a percentage of their appreciated investments—not cash—to their donor-advised funds on a regular basis in order to meet their philanthropic goals without disrupting their regular cash flow. That’s a lot more valuable than simply doing their taxes and telling them what they owe the government.
For client/CEOs, having this kind of game plan and information at their fingertips makes them feel better organized and more in control. It all starts with the Personal CFO asking the client/CEO, “How can I make your life easier?” and then anticipating their needs before they have to ask.