Keeping the Client Annuity Alive

Source: AICPA CPA Insider

The following includes excerpts from the article named below, reproduced with permission.

While a senior partner may have a great rapport with the founder of the company, the second generation of the client leadership may not. Similarly a younger CEO may not have anything in common with a senior partner, but a younger CEO can build a relationship with a younger partner.

Tips on Transitioning Clients

• Partners should list their top 10 clients and recommend back-up partners/senior managers. They should do this two years before expected retirement.
• Do not rule out the possibility of bringing new talent into the firm, if necessary to develop relationships with these clients.
• If the retiring partner at your firm does not follow the written plan to the satisfaction of the Executive Committee, then the Executive Committee may reduce the Deferred Compensation to which the partner is entitled by up to 15 percent (15%) in addition to any other permitted reduction.
• As the newly assigned partner proceeds through the grooming process, all day to day communications should be handled by the new partner.
• Today, many businesses are in their second and third generations. Thus, it is extremely important that older partners maintain a relationship with those who will become the future leaders of the organization.

CPA firms often fail to invest in the clients of the future (remember those initial clients with nominal billings that now represent a significant portion of your practice?)

CPA practices that are changing from compliance to consultative-type practice present additional problems because each year consultative partners have to replace their books of business. Thus, if an individual with expertise does not build a team within the firm to carry on the services, once they retire or leave the firm, the annuity will not be available to provide for retirement payments.

For the complete article, click here and see "Succession: Every Client Has a Life."

From AICPA CPA Insider, AICPA, www.cpa2biz.com, June 22, 2009.