The What, So What and Now What?

Kyle Walters: "To raise fees, you need to raise the value you provide."It's no longer enough to be a historian.

By Kyle Walters

Ever noticed that a car's windshield is always larger than its rearview mirror?

MORE: Clients Don’t Have a Fee Problem, They Have a Value Problem
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When you are driving down the highway of life, looking ahead is far more important than looking behind you. The same is true when it comes to your client’s financial goals.

Reporting the past doesn’t provide them with as much value as helping them see their future. To help clients get to where they want to go in their financial lives, you must help them see the road ahead – bumps, detours and all. But, that kind of thinking is not part of most accountants’ DNA.

Going back to the earliest years of their education and professional training, accountants have had it drilled into their heads that their primary job is to record history – to record very accurately what’s happened in the past. If you think that’s providing value, then think again.

Sure, documenting your client’s financial history is important, but what clients are looking for is actionable advice and recommendations they can trust. That’s how you add value. To do that well, you need to stay focused on the front windshield, not on the rearview mirror.

Adding value can be cliché if you are not thinking about what value means from the client’s perspective. Value can be more meaningful if you realize that your clients want to know three important things from you:

1) The what
2) The so what
3) The now what

These probably aren’t terms that you came across in your business and accounting classes, but they’re essential to delivering value in today’s marketplace. Let’s take them one at a time:

1. The what. What is a client’s current situation? Clients give you, their tax professional, some input and then you produce an output for them. Is that enough? Essentially, that’s just reporting about what happened in the past – the history – the rearview mirror. That’s the historian’s discussion and this kind of work is becoming less and less valuable to clients. That’s because technology can do the same kind of historical reporting faster, more efficiently and a lot cheaper than you can.

2. The so what. This helps clients answer the questions: “What does this mean to me, my family and (if I’m an entrepreneur) to my business? How should I interpret this big tax form that you just sent me? You sent me THE WHAT in the mail, but that information is meaningless unless I understand what all those forms and numbers mean for me and my objectives.” Can you answer those client questions today?

3. The now what. This is where you help clients answer the questions like these:

  • What’s next, now that I know what all those forms and numbers mean?
  • What specific steps do I need to take tomorrow, next week, next month or in the future?
  • How will I remember?
  • Who can I hire or what systems or process will keep me on track?

All good questions. Can you answer them today?

Real-World Examples

The what: A specialty surgeon makes a very high income. He’s part of a physician group (PLLC) and his compensation (millions of dollars) is all in the form of wages.

The so what: This is about having a larger conversation with the surgeon that sounds something like this: “You have all these wages. You don’t need to get paid like this. Let’s have a discussion about your needs including asset protection and tax rates. You’re paying way more than you need to in taxes and we need to restructure some things in your comp plan to lower your tax bite.”

The now what: This is where you can explain that there are some different compensation structures that can save him a whole lot of money in taxes.

There Is a Better Way

CPAs increasingly complain about fee compression. Their mindset has always been, “You give me a check; in return I give you a tax return” (or whatever history report you provide).

By definition, that’s a commodity. How are you going to raise fees with that approach? To raise fees, you need to raise the value you provide.

Just the other day I was talking to a CPA who asked me, “How do I raise my fees without getting client pushback?” I told her, “Clients never have a fee problem, they have a value problem. If you don’t provide more value then you can’t charge more in fees.”

I could see in her eyes this hadn’t occurred to her before. I told her if she could find a way to create more value for her clients, then she could not only charge more in fees, but clients would tell all their friends and she would have a sustainable business.

Build your firm around the premise of helping clients make better financial decisions by showing them the “so what” and the “now what.” Compare that to what most tax firms do after the client’s return is completed. They send a cover letter saying, “Thank you for sending me the money. You’ll hear from us next year when we send you your tax organizer.”

Guess where clients are going to go?

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