Viewpoints

The Difference Between an Ordinary CPA and a Trusted Advisor

Tom Bonadio

Originally Published In:
ROCHESTER BUSINESS JOURNAL
January 2008
Author: Thomas F. Bonadio, CPA

When I started my career in public accounting, the role of a Certified Public Accountant (CPA) was very well defined and structured. We conducted audits and other types of financial reviews. We prepared taxes. And, we were bookkeepers. Providing anything above and beyond these narrow corridors was considered taboo, and in some cases, unethical.

How times have changed!

Today, CPAs who deliver only the services I mention above will soon find themselves obsolete. In order to better serve clients and help both individuals and companies thrive in this fast-paced and ever-changing financial world, CPAs have evolved from merely purveyors of compliance services to trusted advisors to their clients.

There isn’t a business or organization today that can thrive without the guidance of its CPA as a trusted advisor. The key word here is “trust,” as there should be a bond between you and your organization, and your CPA and the resources and capabilities of their firm, that delivers the right combination of risk tolerance, comfort, and security.

In his landmark book, The Trusted Advisor, David H. Maister advises CPAs that being a trusted advisor “means having a big-enough repository of trust so that you can successfully get your client to actually listen to and act on your counsel. It is an attitude and a set of skills for helping a client understand options, face reality, and reason through to a sensible decision or conclusion.”

You should expect a trusted advisor to help you and your organization reach three goals: asset protection, asset growth, and compliance:

Asset Growth

A true trusted advisor is the quarterback of your entire financial portfolio. They have a responsibility, from both personal and corporate perspectives, to help you grow or build assets. This can include: helping you sell a company; finding financing for a deal; providing investment advice and guidance; or participating in strategic planning efforts.

Minimally, a trusted advisor should direct your other advisors, and assist in evaluating, implementing, and monitoring their recommendations. In addition, your advisor must be honest and impartial. He or she must have the ability to see the big picture.

Also, this person must have the capability to integrate all aspects of business, family, and individual in order to provide effective advice.
Asset growth begins with strong planning that incorporates both company and personal situations. When personal situations intersect with business issues, a frequent occurrence in family-run businesses, a trusted advisor can serve the role of arbiter, confidant, or even psychologist in effort to resolve the dispute and keep you focused on asset growth goals.

Asset Protection

When setting out to protect assets, a trusted advisor needs to be responsible and accountable for staying on top of change, and providing guidance on how their client can navigate or even capitalize upon such change.

There are so many changes today that require new ways of strategic thinking. This includes changes to the industry, legislative changes that result in new tax laws, or regulatory changes that create demands for new compliance policies or procedures. There are even changes that occur as a result of family issues, like succession planning, transfer of business assets to the next generation, or change that occurs as a result of estate issues. You must have confidence and trust that your CPA has the resources, means, and capabilities to help you weather these changes.

Compliance

When it comes to regulatory or tax compliance issues, traditional CPAs have had one role, to maximize compliance at minimal cost. In a trusted advisor relationship, compliance issues become more than just completing and filing reports on time, instead they become extensions of the advisor’s mission to grow and protect assets.

Take tax compliance for example. Here, the trusted advisor not only serves to ensure compliance, but because of their intimate knowledge of your individual situation and expertise at their command, they find ways to minimize your tax burden creatively and ethically.

There are several ways in which you can determine if you have a trusted advisor relationship with your CPA. Ask yourself the following questions:

• Is your CPA thoroughly involved and knowledgeable about your overall business, family and personal issues, goals and direction?
  
• Is your CPA aggressive in helping you meet your goals, responsive to your needs and requests, yet able to keep confidences?
  
• Do you feel confident that your CPA has access to the types of contacts, resources, expertise, and infrastructure for helping you grow your corporate  and/or personal assets while keeping you in compliance?
  
• Are they willing to fight on your behalf with those standing in the way of your goals, and leverage their contacts with lawyers, bankers, partners, government, and others to help you reach your goals?
  
• Is your CPA bringing you ideas, programs, or services that are appropriate to your asset growth/protection situation and are they a sounding board for critical decisions?
  
• Are you willing and comfortable enough to share confidential corporate and/or personal information with your CPA?

And finally, ask yourself if you consider your CPA to be a friend. After all, the combination of friendship, accounting/financial expertise, and access to resources is really at the heart of what separates a traditional CPA from a trusted advisor.

Disclaimer: The Bonadio Group provides the information in Viewpoints for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in Viewpoints are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.