Y(cid:48)(cid:54) Are the Value Define Your Worth Differentiate Your CPA Firm Own Your Market 10494-359 By Leo J. Pusateri Sponsored by Private Companies Practice Section (PCPS) 10494-359_you're the value-titlepage.indd 1 4/15/10 8:46:41 AM Notice to Readers You Are the Value: Define Your Worth, Differentiate Your CPA Firm, Own Your Market does not represent an official position of the American Institute of Certified Public Accountants, and it is dis- tributed with the understanding that the author and publisher are not rendering legal, accounting, or other professional services in the publication. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Copyright © 2010 by American Institute of Certified Public Accountants, Inc. New York, NY 10036-8775 All rights reserved. For information about the procedure for requesting permission to make copies of any part of this work, please email [email protected] with your request. Otherwise, requests should be written and mailed to the Permissions Department, AICPA, 220 Leigh Farm Road, Durham, NC 27707-8110. 1 2 3 4 5 6 7 8 9 0 PIP 1 9 8 7 6 5 4 3 2 1 0 ISBN: 978-0-87051-874-4 Publisher: Amy Stainken Associate Developmental Editor: Allison Rudd Project Manager: Amy Sykes Cover Design Direction: Nancy Karmadi 00-Value-FM.indd 2 4/23/10 12:31:13 PM About the Author Leo Pusateri, President, CEO, Pusateri Consulting and Training Passionate, inspirational, and motivating are words many would use to describe Leo Pusateri. Affectionately known as the “value man” in the financial services industry, he is also recognized as the industry’s premier thought partner of value-based training, not only by senior leaders in the C-suites, but among top advisors as well. While his core Unique Value Proposition™ remains focused on help- ing organizations and individuals discover, articulate, and capitalize on their value, Leo’s curriculum goes significantly deeper by teaching profes- sionals the principles of reputational value, as well as how to develop and present it. He guides senior leaders who are looking to drive an eight- to nine-figure lift to their businesses. He also leads financial entrepreneurs who are attempting to elevate their stature from “good-to-great” to ulti- mately become extraordinary in competing on value. When it comes to knowing, pricing, selling, and “living” your value, Leo’s time-honored and proprietary programs are in place around the world. This is a credible testament to his knowledge capital that he enthu- siastically shares with clients. He has traveled the globe from Singapore to Spain, from Vancouver to Zurich, New York City to London, and from beautiful Buffalo to San Francisco-among other spots in and outside of the U.S. His travels find him working with senior leadership teams to finan- cial entrepreneurs, representing broker-dealers, RIAs, investment manage- ment firms, private banks, family offices, insurance companies and others. Through Leo’s robust training programs with clients around the globe, firms have endorsed Leo’s skill set as the absolute best-in-class in bringing value-based training to the table. Due to increased growth, popularity, and utilization of his work throughout North America, Leo opened an office in Toronto and launched Pusateri Canada to extend the intellectual properties and consulting 00-Value-FM.indd 3 4/23/10 12:31:15 PM iv You Are The Value capabilities of his firm. Additionally, in 2008, Pusateri formalized a strategic partnership with PriceMetrix of Toronto, which focuses exclusively on helping financial advisors become better “CEOs” of their business. PriceMetrix custom- ers typically realize increases in assets, revenue and fee-based advisory business. Their programs proactively identify client, product and pricing opportunities. Leo practices what he preaches and is an authentic role model for consulta- tive, respectful dialogue. He truly lives his values—effortlessly and with unde- niable passion—and teaches others what he has learned over his professional lifetime. His highly acclaimed book published in 2002, mirror mirror on the wall am i the most valued of them all?—The Ultimate Element of Differentiation is YOU, describes in detail his proprietary and powerful Value Ladder™ process, and continues to be requested by senior executives, managers and advisors alike. In addition to understanding the nuances and the challenges that financial entre- preneurs face in winning mandates from the HNW and UHNW, he also knows the challenges faced by centers of influence and allied professionals. As a result, the American Institute of Certified Public Accountants (AICPA), the governing body of the accounting industry in the U.S., has recognized Leo’s work to be the peak of effectiveness and the highest standard of quality in the business. The AICPA contracted with Leo for the development of this book, an e-learning cur- riculum, and major speaking engagements for their industry. Horsesmouth.com, an online industry provider of business development strategies, content, and conferences for advisors, touted Leo as best in class for his philosophies on competing on value. He is widely quoted in numerous indus- try publications and was a popular columnist for Financial Advisor magazine. Earlier in his distinguished career, Leo led the sales and marketing efforts for a nationally recognized investment advisory firm, and consulted with Fortune 500 companies, concentrating on sales productivity issues. His experience of more than 30 years, coupled with a keen understanding of successfully working with high net worth clients and his work in the training and the behavior change world, have catapulted Leo into the highest sphere of understanding the intrica- cies of marketing and positioning financial services with the utmost confidence, passion and speed. In addition, he strives to eliminate what Leo describes as the number one disease in the financial services industry: winging it. Whether it is distinguishing a firm by driving key economic metrics such as net new assets and price realization, or teaching a large team of financial advi- sors how to know, price, sell, and live their value, Leo not only forges strategic partnerships, but also—and more importantly—as he is known to say, “lifetime friendships.” 00-Value-FM.indd 4 4/23/10 12:31:15 PM About the Author v Leo is a 1977 graduate of St. Bonaventure University with a BBA degree in Marketing. He is a past alumni board member and is currently serving on the Business Advisory Board to the Dean of the Business School. Currently an active member of the Country Club of Buffalo, Leo has served on various committees to assist the club in achieving its goals. What Leo cherishes most is his family and friends. Happily residing (as he describes it) in “beautiful Buffalo,” he is a devoted husband of 31 years, lov- ing father of four, and proud to say that his eldest daughter is working in the financial services industry. His other three children are pursuing their passions with Leo and his wife’s guidance. In the past, he has spent many years, including two as president, on his children’s school board at St. Gregory the Great. Leo is not only a coach in the financial services industry, but with his limited spare time, he is also coaching his son for his Sunday night Youth Basketball League. Even he can’t put a value on that. 00-Value-FM.indd 5 4/23/10 12:31:15 PM Foreword By James C. Metzler, CPA Vice President, Small Firm Interests, AICPA As I write this, we are taking the first steps out of a worldwide recession that has shaken all sectors of the economy, from the largest banks to the smallest businesses. The clients that CPAs serve are experiencing shrinking demand for their goods and services, disappearing credit lines, large layoffs, and severely restricted cash flow. As a result, business owners and families are scrutinizing every expense. They are reevaluating their relationships with their CPA firms and the fees they pay them. Sound familiar? As someone who practiced in a local firm for 32 years, I have experienced more business down cycles than I care to remember. I can’t help but reflect on my years in public practice and the challenges we are facing today. What has enabled so many firms to survive and even thrive in tough times? What is it about a firm that makes its clients stick with it even when the competition offers a dramatically lower fee quote? And, once you identify this special quality, how do you use it to your firm’s advantage? I spent my entire public practice career in “beautiful Buffalo,” as Leo Pusateri refers to our mutual hometown. When I met Leo there and learned about his Value Ladder™ and related concepts, I saw immediately that they could help my fellow CPAs answer these questions and offer them a workable strategy for better understanding themselves and their clients. When people choose a CPA firm, they look for technical expertise and quality client service, but you and I both know that there’s more involved. Your clients pick and stick with your firm because of the important connection they have made with you. It is a special bond, one that can even span generations, but one we rarely think much about. What does it encompass? Can it be trans- ferred? Can it be taught? Can it be learned? Is it formed during the first meeting with a client or is it the result of a long history together, hashing out problems and planning for the future? Those are critical questions for every firm because winning new clients and holding on to the ones we have is not as easy as it used to be. The consumers of 00-Value-FM.indd 7 4/23/10 12:31:15 PM viii You Are The Value our services are more sophisticated and far more educated about the many choices open to them in the marketplace. As Leo will explain in this book, that’s why winging it—flying blind into the marketing arena and hoping your clients and potential clients will just get how great you are—doesn’t cut it anymore. We’re also seeing the emergence of more small firms, all of which are seeking new clients. Once upon a time, hanging out a shin- gle was enough to attract them, but practice development is now a much more complicated task. For new and existing firms, the key goal will be to differentiate themselves from the rest of the pack and make meaningful connections with clients. To do that, we must be able to articulate why we are uniquely qualified to help our clients address their problems and achieve their goals. It’s no longer possible for firm owners to rest on their laurels and wait for new clients to knock on the door. As the most recent Private Companies Practice Section (PCPS) CPA Firm Top Issues survey found, partner accountability has become a critical issue for many practices. CPA firm owners are expected to bring in new business and expand the services they provide to existing clients. And the old spray-and-pray technique in which you trot out all your services and hope something catches the cli- ent’s attention will no longer work. Clients want to know specifically how you can address their particular needs and what benefit you will bring to the relationship. To further reinforce the point, consider the fact that we are part of a graying profession fast approaching an uncertain retirement. Approximately 71 percent of AICPA members are over age 40, and roughly one-third of our members are age 55 or older. That means we are about to see a signifi- cant transfer of CPA firm ownership from one generation to the next in the coming decade or so. How well that transfer works depends, once again, on the connection between practitioners and their clients. In a CPA firm, ownership transfers are traditionally structured with payments made to retiring owners over 5–7 years. The retiring CPA’s entire payout depends on his or her successor’s ability to retain the firm’s clients during that time. However, retaining a client is not a given and usually turns out to be a challenge. That’s not too surprising because CPA firm owners commonly complain that their managers and up-and-coming leaders don’t have what it takes to replace them. The problem is not that they lack technical skills or ambition but that these younger professionals have no experience estab- lishing a meaningful relationship with clients based on mutual trust and 00-Value-FM.indd 8 4/23/10 12:31:16 PM Foreword ix respect. If that remains the case, how will this new generation hold on to the business that will cover retiring owners’ retirement payouts? As you can see, a compelling case exists for taking the time to con- sider the relationship that you and the other members of your firm have with clients. We live in complicated times, but the solution to at least one of our problems is simple. If we can forge and maintain that crucial bond with clients, we have a good chance of keeping them for the long term. But, as Leo says, an effective meeting of the minds depends on a meeting of the hearts. We must understand our clients’ needs and our own value well enough to see how the two can work together. That’s why I’m very pleased that the PCPS has chosen to publish this book, which adapts Leo’s ideas to the issues confronting CPAs. It comes at a time of great economic uncertainty, but its message is timeless: you are the value that binds clients to your firm. And the strategies in this book will help you articulate and enhance that value. 00-Value-FM.indd 9 4/23/10 12:31:16 PM Preface I met with a CPA buddy of mine as I was doing some research for this book. I was startled when he said, “I believe CPAs are the greatest sales- people out there.” That surprised me. I was certain that if I talked about selling in this book, CPAs would never read it because they don’t consider themselves salespeople. A CPA’s business is about advice, counsel, consult- ing, providing strategic perspective, and lending a sympathetic ear. CPAs are in a trusted position, and people believe they deliver the truth and nothing but the truth. I’ve kiddingly told my own trusted advisor, my CPA, that he some- times gives me information (the truth) without a shot of novocaine. Some meetings have felt like root canals. But I needed to have someone look me in the eye, give me the straight answers, and explain my tax position properly. I needed to hear the consequences, both positive and negative, and the appropriate recommendation on what to do next. I didn’t need to be sold anything, but an Alka-Seltzer, soft pillow, and massage might be appreciated on some occasions. To top it off, my CPA delivers this news with empathy and a smile on his face. The news can be positive, or it could cause me to make some tough but appropriate decisions to protect myself, my family, and my business. Whatever the circumstance, I feel better leaving, even without an IV or medication. I know my best interests are always the top priority. The importance of that approach—putting the client first—should never be taken for granted. With one horror story after another in the financial services world in recent years, a CPA’s objectivity and integrity are invalu- able assets. But that’s why my friend the CPA believes CPAs are great salespeo- ple, regardless of whether they know it. CPAs get to raise the important questions and provide the knowledge necessary to find the answers. CPAs acknowledge, clarify, and confirm. The value of CPAs’ “bedside manner” also should not be overlooked. CPAs absolutely care. They truly exhibit skilled selling behaviors in a profession that is pretty uncomfortable with that word. 00-Value-FM.indd 11 4/23/10 12:31:16 PM xii You Are The Value Selling isn’t what the profession is about, but CPAs do need to be able to set themselves apart and take advantage of new business opportunities. They need to understand their own value. My CPA buddy insisted that the accounting profession needs help in competing on value. “We need to distinguish our firms better,” he said. “We need to differentiate our solu- tions. Our business is becoming more commoditized and price sensitive as a result. Help us! “We need to know how to sell our value. That’s right, Leo,” he told me, “I said SELL our value! We need other people in the community to talk us up in ways they never did before.” Call it what you want—selling, consulting, advising, counseling, strategizing—I don’t care. CPAs need to think and act differently. They need to know how to keep clients, grow clients, and constantly bring in new clients. “You know what, Leo?” my friend said. “Not only do we need to know how to sell, but we also need to know how to win.” What do we mean by winning? Well, that’s what this book is all about—winning. Winning when it comes to what I will refer to as “value moments of truth.” Those precious moments when you have an opportu- nity to look a prospect or client in the eye and answer important questions that help him or her determine whether he or she will do business with you or your firm. You see my friends, YOU are the value! You make or break opportunities. The single most compelling story you need to present is the story of you, your firm, and the value you provide to clients. That story delivered at a world-class level will help you win. If winning means hanging on to top clients and attracting new ones, then CPAs are in a great position to do it. Both of those goals require a lit- tle salesmanship, however, and CPAs think of themselves as professionals first. How, then, can CPAs sell themselves while retaining their profession- alism? By knowing their own value and being able to communicate it in every business situation. That’s a journey this book will help you make. 00-Value-FM.indd 12 4/23/10 12:31:16 PM