Do you want to know how to show tough love to your clients so you can help them create better outcomes? Many companies hesitate to make decisions about technology, but it can cost them significantly. To improve your practice, learn how to say, “No!” to staying stagnant and, “Yes!” to positive change.
Being an advisor is hard work, and you need all the support you can get. Luckily we’ve brought you another episode of On the Margins: LIVE, with hosts Caleb Newquist, Gusto’s Editor-at-Large, and Will Lopez, head of Gusto’s accountant community. They discussed building a sustainable firm, how to show tough love, and why you and your clients need to hop on board with industry changes.
Why you need to show tough love to your clients
The accounting profession is changing rapidly with automation sweeping the industry, remote work becoming commonplace, and cloud-based computing replacing in-house or local hosting. At the time this episode was broadcast, the COVID-19 pandemic had further accelerated these changes, making it even more urgent for firms to adopt new ways of doing things. The pandemic thrust countless companies into turmoil as they were forced to lay people off, navigate complex loan requests, and find ways to cut costs and increase revenue. Accountants played a pivotal role in their clients’ financial lives, as they always have.
However, this isn’t necessarily enough. Caleb and Will argued that both firms and their clients need to adopt new technologies and ways of doing things even more rapidly. Businesses need to leverage the increased speed, accuracy, and scope that automated technology can give them, even if it requires uprooting the status quo. Accounting pros who don’t guide clients toward this goal with enough tough love are doing a disservice to them. Similarly, accounting firms also need to greatly update how they operate and provide services. They, too, need tough love, but they have to give it to themselves. If they don’t, they risk becoming irrelevant in the industry.
“Your firm and your clients need you right now to ramp up their technology and remote client management game. I’ve always seen our profession save lives and livelihoods time … time again. … Firms need to adopt new ways with new tech faster and push clients to do the same now.”
– Will Lopez
When it comes to guiding clients towards new practices, firms need to jump on opportunities as they arise. The time is ripe for firms to step into bigger, more instrumental roles for their clients. The need for guidance and advisory is massive. Will and Caleb shared that there’s an ever-increasing demand for advisory services.
“Clients continue to demand more time with their accountants. Roughly 8 out of 10 expect more from their accounting professional than ever before.”
– Will Lopez
If the need for advisory is so great, why are CPAs balking at upping their game? Caleb and Will argue that it has a lot to do with a risk-averse mindset. It’s one of those paradoxes in which someone’s greatest asset is also their biggest downfall. Being cautious and careful are great qualities. They are part of what makes CPAs good at their jobs. Clients rely on their detail-oriented, conscientious, careful accountants to help them avoid costly mistakes. At the same time, risk aversion can lead to stagnation. When an industry is on the cusp of a revolution, you can’t afford to wait.
“Accounting firms are really good at resting on their laurels.”
– Caleb Newquist
There’s also the fact that change is energy-intensive, which can lead to procrastination. But Caleb argues that avoiding change is costly. Not only does it keep you behind the curve with clients, but it also impacts your firm. If a head CPA avoids implementing necessary changes because of their own concerns around doing so, they are also limiting their staff. Firm leaders should carefully consider the costs of keeping things at the status quo.
“There’s not a lot of incentive to change, but I think what people might be forgetting is that [not changing] may impact their employees. It may impact their clients. So they need to … have a little bit of a critical eye on their practices to see [how] they can make things better for everyone, just not themselves.”
– Caleb Newquist
Meanwhile, CPAs are also hesitating to advise their clients to adopt new technologies. That same cautious and careful nature comes into play:
“Accountants are notorious for not showing tough love to clients for fear of losing them, and I think the profession’s kind of riddled with that mentality.”
– Caleb Newquist
Unfortunately, a cautious mentality won’t help when urgent changes are needed. As Caleb and Will shared, the COVID-19 pandemic upturned the way firms and clients operate, potentially for good. But even before the health crisis, remote work was becoming more and more commonplace. Being able to securely store and access data easily through the cloud is no longer a preference—it’s becoming a necessity. Likewise, opting out of automation—which provides the greater accuracy, speed, and scope that businesses need—is costly.
Another reason to move fast is timing. It’s much easier to suggest and implement changes when everything is changing already.
“It just seems to me that if there were a time where you could try something different … try something new, … [or] take some risks, this would be the time to do it because people are just kind of used to things. People are kind of used to the chaos right now. They’re kind of used to things being pretty far from normal. And so then, why not just take a risk right now when it feels like things are just kind of up in the air?”
– Caleb Newquist
At the end of the day, all firms need to take the long view, not the short view, with their strategy. What works, for now, won’t work in the future. In contrast, an investment now—whether that’s putting resources toward new technology or shifting processes—will pay off in the future.
“Accounting firms enjoy some of the highest margins in professional services. So let’s put some of that money and energy back into creating a firm that is more sustainable and works more for your employees and more for your clients.”
– Caleb Newquist
The time to show tough love to your clients and your firm is now.
Who should you focus on first, your firm or your clients?
Tackling the revolution in the way we work and serve clients is two-fold. One, firms themselves need to get on board with the changes they’ll be advising their clients on. Two, they need to show that tough love to clients and urge them to update, even revolutionize, how they operate. So the question is: Who comes first?
There’s no easy answer. It will depend on each firm’s resources of time, energy, and money. It will depend on who their clients are, how prepared they are to advise them, and the level of functionality or performance the firm is currently operating.
In an ideal world, firms would focus on themselves first. This will give them the confidence to be able to guide clients in the same direction, including being able to guide them by tapping into their firm’s first-hand experience. This gives them more credibility in the eyes of their clients and more integrity themselves.
“If you’re going to focus on something … you should get your own house in order first. … Practice what you preach. [You’ve got] to start with yourself.”
– Caleb Newquist
At the same time, you may have reason to focus on your clients. You may feel they need it more than you. Or perhaps your firm is not in the position to implement changes, either in terms of financial ability, time, energy, and other resources. So there is an argument for focusing on clients first. Still, it’s not the best-case scenario.
“There’s always the philosophy of ‘Do as I say, not as I do.’ The cobbler’s children have no shoes, and so that’s the case of a firm that’s like, ‘Well, I’m going to focus on my clients because they’re the ones that really need it.’ … I guess if it were me and if I was in a spot where I needed to make some changes, I’d focus on my firm first [and] get my house in order and then take those learnings and then try to apply them to my clients.”
– Caleb Newquist
A really good reason for enacting changes within your firm first is simple self-preservation. The more prepared you are to withstand upheavals in the industry, the better chance you have of withstanding disruptions. Will gave the example of how the firms that were set up to work from home vs those that weren’t during the COVID-19 Pandemic.
“The ones that were most successful were the ones that had their house in order first and were ready to absorb all the fallout on behalf of clients. The ones that were least successful were the ones scrambling at the last second, trying to implement resources so they could respond to client intake or client meetings. [Those relying on] face-to-face meetings got totally obliterated [when] they had to go do something like Zoom.”
– Will Lopez
The time has come to cement your status by adopting the tech you need to succeed in the future. There’s no time for delay.
Learn more about tough love with clients
Accountants are known to be risk-averse, which serves them well in many ways. However, when both their firms and their client’s companies’ long-term sustainability is impacted, risk aversion doesn’t make sense. Both firms and their clients need to begin implementing new technology now, start the process of migrating to the cloud, and shift how they operate.
In an ideal world, firms would first do this transformative work themselves, which would help them guide their clients more confidently. This approach may not always be possible, but this should not stop accountants from being firm with their clients and their own teams. It could make or break clients and their future success.
Gusto is here to help prepare you for a successful career. If you haven’t already, check out our other article based on the same episode: “How to Build Trust, Show Tough Love, and Embrace Change with Clients and Your Team.”
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