CPAs vs. Banks? The Changing Competitive Landscape

?AT LARGE: CPAs Battle Banks for Business? reported on how community banks seemed to be muscling in on CPA services like tax prep through their trust departments while they are reducing their reliance on CPA-prepared financial reports.

But most CPAs are more worried about clients doing the work themselves and the power of technology to take away business.

Other? Please specify. And how concerned should we be?
— As far as the national bank threats, None in this area. In the online pay, we help their business customers with their software as the bankers have little local software knowledge. In the finanancial area, we pick up their clients when they keep changing bank reps and not keeping track of their clients basis in stocks and funds.
— In what ways are banks competing with CPAs? I just do tax work for the most part, I don’t see banks as a threat. I see them as partners.
— The “Evil Empire” in my mind is Intuit, but we can’t live without them. They capture tremendous amounts of competitive information directly from us through our use of hteir products and then they continually expand the products they offer to take away more of what we do….and since we help them earn a profit on what we buy, we are sort of “feeding the dragon”. They are a great company and i won’t bet against them, but through the years, they’ve continually crept further into what we do—basic bookkeeping, financial statement preparation, payroll, charity gift valuations, file backup, analysis, etc.
— One of the key issues that our competitors face is that they must produce through volume. With volume comes higher overhead and less service. My clients regularly complain about their advisors, bankers and attorneys. However, the issue we as CPA’s face is that will we add the additonal services that lead to the more profitable work. For instance, payroll leads to 401(k) investments and QRP TPA services. Too many CPA’s I know find Payroll a loss-leader. When bundled together they become profitable. More revenues from the same client, equal higher and consistent revenues from fewer clients, and in turn, client service and satisfaction. They are already paying someone to provide these services, why not us?
— Well, it seems that whatever happens we’ll eventually get back, ultimately, what others “take away,” once they’ve lost interest in doing what we do, and figure out they can’t do it as well, and cutting fees just costs them profits……
— We should be very concerned and push for keeping information confidential and not available to other portions of the entity. Not allowing them to used the confidential information to be used to sell products to them. They are using tax preparation as the free service inorder to feed their more lucative brokerage or insurance business.
— It is called adapt or go the way of the dinosaur. Nothing stays the same.
— CPA’s should be concerned about their inability to provide consultative support in how to improve profitability. Particularly those CPA’s that are strong in tax and bookkeeping – they are ignoring the value client’s seek from their financial advisors. Alliances with consultants may be the solution.
— So banks are going to hire kids just out of hire school at low wages to do high level tax returns, audits, reviews and compilations? All the while keeping abreast of the tax law and GAAP changes every year, getting 40 hours of CPE in and taking the malpractice risk? Plus often holding advanced degrees (MST and JD). Sorry, but department store tax prep kiosks and Turbo Tax don’t do what I do. And if I wanted to sell insurance, I wouldn’t be practicing high level tax accounting.
— We need to have regular contacts with our clients to intervene when they tell us another organization is promoting services we are able to perform. Most clients, who are attracted to services offered by competitors, are unaware of our abilities.
— Most of these competitors do not consider accounting/tax services as their core business. Revenue and earnings for these business units are minute compared to overall revenue and earnings of the core business.
— My concern is that my clients are having a hard time finding quality in hard working lower level employees doing the day to day work. The article says to me that the banks, et al, are going to try to do these lower level jobs.
— false advertising and underbidding.
— Government regulation of the Profession. Very Concerned
— Many business owners are being swayed to become “do-it-yourselfer”. I view this as a minor threat to our accounting and tax revenue base. Banks and brokerage houses are a bigger threat in the area of financial planning services.
— I think there will always be a need for CPA’s, many of my clients are nervous about dealing with banks for too many services. Hard to change banks if the need arises. and more importantly, if they hit a hard spell or things go badly the banks tend to say goodbye, and if they are who you depend on for everything there is no network opportunities for new service providers. Also, clients (at least good ones) tend to look at their CPA’s as negotiators with their banks and other service providers. Its hard to have a bank in-house bookkeeper or accountant help you prepare adequately for that loan proposal. You are never sure which side the bank accountant is on.
— Stock brokerages using free tax prep as “loss leaders” for high net worth individuals. These are our best clients.

Any other ideas or comments?
— An accountant performing legal services is banned, why not the reciprocal?
— By focusing on what we do best…the planning (which takes analytical abilities and sophisticated tax techniques), we should leave the big financial institutions in the dust. But, we need to understand that planning involves much more than just running the numbers. It takes a commitment to understand why your client makes the financial decisions he does and help him clarify the picture of what he wants his life to look like.
— CPA’s need to use technology effectively. I do much of my work through email. I get client answers in writing(email) to my questions. It may take longer to type in the question but you don’t have to worry about catching the client at a good time on the phone.
— Become better at what we are trained to do. Diversifying services and adding new services does not allow you to be experts in anything.
— By enhance professional image, i mean to make clients think of us as the “family/company finance guy” like they woudl the family doctor—we shoudl be the first person they call for any financial solution and we should do all we can to shed the “tax only” or “beancounter” image.
— To be successful a business must excel at on or more of three functions: exceptional personal customer service, innovation, operational efficiency that yields low costs. Small CPA firms have an innate advantage regarding exceptional personal service and must try to stay even with the other two.
— Review your clients ledgers. See how much they are paying for the services you could be providing.
— Bill fairly for services rendered.
— Of all of these, integrity and objectivity are the key, because ever client that uses us will not TRUST us without them.
— Marketing and communication at times may work hand in hand, but the do not go together as implied above in your questions
— Providing accounting services without a CPA license should be illegal.
— The banks can’t advise their own clients properly in the investment arena. not objective & commission driven.
— Stop trying to be everything to everybody. Do a few things well.
— We must educate the consumer that we are the most objective provider of financial services. We need to go beyond audits and tax preparation and be involved with clients’ total financial activity. Most consumers misunderstand what we offer.
— It depends on what we want for each of our businesses and the profession. I do not enjoy data entry. I’d rather train, proof and advise on the clients’ data entry. And more important to advise on other areas of the whole business from an challenging educated perspective, not mind numbing clerical work. That goes for the other services in the article. If the banks want the lower level type work, that leaves us with higher work/advise and a partner who can work with us if we want that teamwork.
— Make our services relevant to the client. Very important
— Our Stongest asset is being independant and advice accordingly free of commission concerns.
— I think as long as CPA’s strive to maintain technical competence, professionalism, independence, etc we will be viewed as go-to providers of services. Finding a specialty niche and getting very good at it can also be a boon to a small practitioner (I’m a CPA who functions as a TPA for very small 401k plans – it’s very profitable and noone wants the little guy’s assets therefore I have no trouble getting clients).
— Be professional, no money maker.
— Return to being CPAs who provided professional services that won the respect of the population at large and stop trying to compete with every other professional group offering services that are not within our professional scope. Let’s return to the profession that kept the insurance agents, financial planners and other consultants honest. We really don’t need to compete in these areas. If CPAs want to sell product or other professional services, let them join the Associations related to the products or services being sold.

Posted on May 6, 2005