Not your father's bean counter

by Tony Novak, MBA, MT, OnlineAdviser at Freedom Benefits, originally published in 2003, last revision 4/5/2012

In past generations Certified Public Accountants provides small business owners and affluent individuals with services in three primary functions: 1) to prepare tax returns, to 2) provide opinions on specific proposed transactions, and 3) to help with complex financial decisions.

Today it is possible for anyone with a willingness to use available online resources to handle the first two of these functions at a higher level of proficiency than could have been accomplished with professional help a generation ago. Tax returns are almost always prepared with the use of a software program now. Extensive information about even the most complex financial products like insurance, investment, loans and real estate is widely available on the Internet. An independent professional opinion would hardly seem to add additional value other than comfort and convenience. That leaves today' s accountants primarily in the third function: the role of acting as a financial adviser to help clients with complex decisions. Fortunately for the job security of accountants, this one remaining function is more than enough to keep CPAs busy.

Today’s accountant is increasingly used as a financial adviser by default. While the CPA may not be the most knowledgeable on specific issues, he may be the most independent. To operate in this environment, accountants focus on building a relationship that can facilitate the financial success of each individual client. This role has just as much to do with counseling as finance. A successful adviser spends more time getting to the heart of the issue “what do you really want?” than on specific technical advice. The best accountants realize that simply managing assets or supervising transactions is not enough in today's market and does not really contribute to growing the net worth of a client.

Financial advisers now recognize that not every financial decision will be successful and that an occasional financial flop is not an indication of failure of the overall financial plan or strategy. In fact, some of the greatest investors argue that we can still be wildly successful even if half of our financial ideas fail. The key to long-term success is to manage risk and our reactions to financial news in a way that promotes overall financial health. We must recognize and avoid patterns of unhealthy behavior that will ultimately lead us to repeat the financial problems of the past.

In the past, most people worked with accountants in their own local community. Today it is common for us to use accountants and other financial advisers who work in another state, many of whom we never meet in person. Although nothing will ever replace the security of a face-to-face meeting with a person we trust, it is far more efficient to conduct business by telephone and electronic communication. An astute accountant can significantly cut financial costs and improve overall financial results for clients by coaching them in the use of online technologies.

The best accountants today have a background in a field like psychology, teaching or counseling combined with advanced career background and degrees in finance, accounting and law. The work environment should allow the accountant the freedom to pursue truly independent advising. Most traditional CPA firms or diversified financial companies have a corporate culture that makes this impossible. The most important factor, of course, is a level of trust. Clients should pay close attention to any issue that does not “feel right” and advisers should continue to work on that issue until it is fully resolved. It is natural and logical to avoid any client/adviser relationship that involves transaction commissions, ongoing charges or restrictions on termination.

Perhaps the best thing about a relationship with a good accountant is that we have the opportunity to define and then measure the success of the relationship. If we have a specific goal developed in partnership with the accountant of retiring at age 55 with at least a million dollars net worth, it is easy to gauge our progress toward that goal. Both the adviser and the accountant are committed to that goal. Hiring a great accountant for life can be the smartest financial decision a person ever makes.

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Not your father's bean counter

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