SUCCESSION & RETIREMENT

Help! A Partner Wants to Retire Really Early

By

six shocked coworkers

How big should the buyout be?

By Marc Rosenberg
The Rosenberg Practice Management Library

Question from a reader: We didn’t contemplate an owner leaving before normal retirement age unless it was because of death or disability or we had to fire them. However, as we were discussing hypotheticals at a recent partner meeting, we came to the uncomfortable conclusion that, currently, there’s nothing to stop owners from accumulating large buyout balances and just walking in one day and offering up their resignation pursuant to our partner agreement, thus entitling them to receive substantial buyouts as long as they give us a one-year notice. Our vesting provision has a very limited penalty for early retirement: the buyout is reduced by 2 percent a year for every year before 60 they leave.

MORE: Thirteen Traits of Partners You’ll Want to Keep | Six Rules for Keeping Partners Happy and Productive | Five Ways to Separate Accounting Winners from Losers | Core Values: Why Your Firm Needs Them | Voting on Ownership Basis? Three Better Methods | Fifteen Big Questions for Your Next Strategy Session
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

 

No matter what, we need to modify our agreement so that if someone wants to leave early, they can do so, but they must know there will be a stiff penalty. We don’t want our partners to see their vested buyouts as large savings accounts that can be withdrawn at any time. Instead, we want them to see our buyout as a true retirement plan, one that is redeemed close to or at a normal retirement age. My current thinking is that we restrict it in a similar way to an employer-funded retirement plan. The first day you can withdraw is the day you reach 55½, subject to vesting provisions and stiff penalties for early withdrawal. We think there should be a minimum number of years as a partner in order to receive any buyout.
READ MORE →

Thirteen Things to Consider Before You Sell Your Practice

By

man sitting at desk, staring off thinking

Are you being realistic?

By Ed Mendlowitz
202 Questions and Answers: Managing an Accounting Practice

QUESTION: I am getting older and want to continue working at least five more years. Should I merge now to anticipate and facilitate a buyout?

MORE: How Much Is Your Tax Practice Worth? | Ready to Retire? Selling Your Practice Is No Strategy | Uncooperative Partner Might Not be the Problem | Merge in Lower-Priced Work without Losing Out | 20 Things You Need for a Business Valuation
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

RESPONSE: Selling means retiring. Is that something you want to do? I’ve written many times about being clear about your goals and what you really want. That being said, here is a general discussion about the reality of the value of your practice.
READ MORE →

Ready to Retire? Selling Your Practice Is No Strategy

By

Older businessman sitting at desk smiling as wall clock indicates 5 minutes to retirement

What are the guarantees?

By Ed Mendlowitz
202 Questions and Answers: Managing an Accounting Practice

QUESTION: I’ve heard you say that you shouldn’t count on anything from your practice when you decide to retire. Are you serious?

RESPONSE: I probably said that, but it was in the context of planning for guaranteed cash flow in retirement. A practice’s value is never guaranteed until the checks clear.

MORE:  Uncooperative Partner Might Not be the Problem | Merge in Lower-Priced Work without Losing Out | 20 Things You Need for a Business Valuation
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

I did say that it is important to create an asset base for retirement and that these can come from a number of sources – and we each need to assign an importance to each source and a probability of their providing a comfortable retirement.
READ MORE →

Seven Keys to a Complete Succession Plan

By

Your client probably hasn’t considered them all.

By Ed Mendlowitz
The CPA Trendlines Practice Doctor

Clients who own businesses should have a plan of succession.

One plan should be for when and how they will retire, and another for if they should die while they are in full control of the business. Things happen and will happen and can be devastating to the family – financially and emotionally.

MORE ON MARKETING: How to Begin a Business Valuation | How to Help a Client Start a New Business | Second Opinions: An Old Service Under a New Label | Help Clients with Employment Compensation | Help Clients with Basic Budgeting | Questions for After Tax Season | 28 Data Points for a Financial Planning Discussion
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Helping a client develop a succession plan can be a valuable good deed for the family as well as providing a great feeling of comfort for the business owner. Advising on how to transfer stock to successors or the next generation always represents additional services.
READ MORE →

Sandra Wiley: Staffing Problem? Check Your Culture

By

Whether it’s clients or talent, if you build a better business culture, you’ll get better results.

Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).

With Liz Farr
The Disruptors

As shareholder and president of Boomer Consulting, Sandra Wiley has been speaking with firm owners and leaders for nearly three decades and clearly sees the need for change in the profession.

“The business model that was built before cannot be the business model that you have going forward. It simply doesn’t work,” Wiley said. “Now, we’re still living in the old business model,” and we have to get out of it.

MORE PODCASTS and VIDEOS:  Peter Margaritis: The Power Skills Every Accountant Needs | Joe Montgomery: Find the Sweet Spot of the Right Clients, Right Services and Right Prices | Marie Green: Your Bad Apples Are Ruining You | Megan Genest Tarnow: Hire for Curiosity Rather Than Compliance | Clayton Oates: One Way to Keep Clients for Life | Randy Crabtree: Follow These Three Rules to Keep Employees Happy | Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can Geraldine Carter Save Accountants from Themselves? | Re-Inventing Accounting with Tyler Anderson

GoProCPA.com Exclusively for PRO Members. Log in here or upgrade to PRO today.

When she does exit interviews to find out why people are leaving a firm, she said they all say it’s because of the hours. They need to find more balance in their lives, and they need to work less. While accountants do have government-imposed deadlines for tax returns, there are ways to reduce hours, Wiley explained. We can do extensions to spread the work out over time and people, and we can outsource. Most importantly, we can be more selective in the clients we work with. “We don’t have to work with every client we’ve ever worked with,” Wiley said. READ MORE →

Be the Flywheel to Increase Revenue

By

“This will be the largest transfer of wealth the nation has ever seen in such a short period of time.”

By Rory Henry, CFP®, BFA

Henry

Rory Henry is a Director at Arrowroot Family Office and host of the Wealth Management Forward podcast. He can be reached to discuss ways to integrate financial planning into your practice through the CPA Partnership program at (310) 566-5865 or at rory@arrowrootfamilyoffice.com.

The financial advice business is undergoing significant change, particularly in the accounting and wealth management sectors. The arrival of private equity firms, combined with the rise of M&A and rapid advancements in technology, has shifted the landscape considerably. While these changes are unsettling to some practitioners, I view them as opportunities.

MORE: Four Core Principles for Elite Wealth Management | Why You Need a Team of Experts | Why a Virtual Family Office? Why Now? | Is Your Client’s Umbrella Big Enough? | Your Client’s Instincts Are Wrong | Preserving Wealth Is a Different Mindset | Three Approaches to Investment Consulting
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

In many ways, a CPA is a flywheel at the center of the financial advisory engine. All the other providers and advisors rotate around the CPA, and together they build momentum as the firm expands its offerings and as the advice engine gains speed and confidence.

READ MORE →

How Partner Buyouts Work

By

https://cpatrendlines.com/?p=77973Three big issues must be decided.

By Marc Rosenberg
How to Bring in New Partners

One of the benefits that new partners receive in exchange for their buy-in is that they will receive a buyout when they retire. This amount can be in excess of a million dollars at many firms. Receiving a retirement buyout is one of the major reasons becoming a partner is so lucrative.

MORE: 11 Best Practices for Partner Compensation | Fifteen Steps to New Partner Buy-in | What Buying In Actually Means | Why Buying Into a Firm Is Such a Great Investment | Four Philosophies for Managing a CPA Firm | How Partner and Staff Actions Impact Profits | The Business Side of CPA Firms
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

The flip side of this is that new partners must agree to buy out older partners when their day comes. Therefore, any plan for bringing in new partners must include a provision for a partner retirement/buyout plan.
READ MORE →

Jody Padar: Build a Practice that Works for You, Not Vice-Versa. 

By

If you can’t change your pricing or your customers, it doesn’t matter how efficient you are

Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).

The Disruptors
With Liz Farr for CPA Trendlines

Jody Padar, the author of The Radical CPA, has been shaking things up in the accounting world for years. But today, firms are at a boiling point, limited by supply and demand. “You only have so many people doing the work. And what are you going to do? You can’t make the work up. It’s got to get done,” Padar said.

MORE: Jody Padar here

PODCASTS and VIDEOS:  Peter Margaritis: The Power Skills Every Accountant Needs | Joe Montgomery: Find the Sweet Spot of the Right Clients, Right Services and Right Prices | Marie Green: Your Bad Apples Are Ruining You | Megan Genest Tarnow: Hire for Curiosity Rather Than Compliance | Clayton Oates: One Way to Keep Clients for Life | Randy Crabtree: Follow These Three Rules to Keep Employees Happy | Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can Geraldine Carter Save Accountants from Themselves? | Re-Inventing Accounting with Tyler Anderson

GoProCPA.com Exclusively for PRO Members. Log in here or upgrade to PRO today.

The old business model was taking whoever walked in and billing by the hour. But today, we don’t have the capacity. “There’s so much work out there,” she explained.  “I have not heard any accountants say that they are looking for work. They’re all saying, ‘Stop, go away. I don’t have the resources to serve you.’”
READ MORE →