Month: November 2020

When it comes to considering a tax firm, you may find yourself struggling to come up with what questions to ask, which services to consider, and how to determine what are the appropriate fees.  Here are some key considerations to keep in mind as you’re going through the process:

1. What Services Do They Offer?

Your search for a CPA Firm may arise because of a specific need, but since you’re going through the process of vetting firms already, you should take this time to get a better understanding of all the services offered. Your personal and/or business needs may change, resulting in the need for additional services.

2. Fees

It is very important to get a full understanding of how the firm charges fees. Are they charging you each time they speak with you? Do they only charge for the services they perform? Having a clear understanding of this at the onset will be hugely beneficial as you’re budgeting for the cost.

3. Credentials and Certifications

There are some firms that can help with the tax advising and planning side, but depending on the level of sophistication needed for your personal and business matters, it may make sense to ensure that the firm has Certified Public Accountants (CPAs) and, if necessary, Master’s in Taxation (MT).

4. Do You Feel Comfortable with the Team?

You may be wondering why this matters. Truth is that it matters A LOT! You’re sharing your personal finances and relevant information about your business with this person. You want to make sure you’re doing so with someone who is not only capable, but someone you trust.

5. Accessibility

How quickly do you get a response? This is important, especially during peak season for CPA Firms. If your point person isn’t able to take your call, do you have other points of contact on the team?

6. Ease of Working with Your Other Service Partners

This one is often overlooked or understated. Tying this in with number 4 above, your tax advisor should definitely be someone you trust since this person will very likely be interacting very closely with your other service providers, such as your lawyers, money managers, and business partners. 

7. Comprehensive Planning

This may not be a need on day one, but whether the services needed are for your personal or business needs, you may want to consider a firm that has the ability to not only prepare your returns, but also provide tax planning solutions and strategies for the future.

8. Versatility

Although this may not be a requirement, it would be helpful to have firms that specialize in certain services (i.e. forensic accounting) or have expertise in a specific industry, such as manufacturing or industrials.  Again, this may not be a dealbreaker in your decision-making but it could be a huge plus, especially if your circumstances require specific needs.

9. Access to Other Services Providers

This one is also often overlooked as a key consideration when interviewing CPA Firms.  When you think about your core team of service providers, your CPA is definitely on that list.  As you’re considering a law firm or money manager, it would be hugely beneficial for the CPA Firm to have a robust network of lawyers and financial advisors, insurance providers, and other service providers that they could refer to you.

10. Successors

The harsh reality is that nothing lasts forever. People move onto other firms, some retire, and other circumstances may arise that may result in a change to your primary point of contact. Rather than starting the process all over again, it would be a huge advantage to you to ensure that there is a successor in place working alongside your point of contact for continuity, and of course, familiarity.

The process of interviewing money managers could be a daunting one, particularly if this is your first time entrusting another person with the oversight of your hard-earned money!  Here’s a list of some 10 questions you should consider asking:

1. Are you acting as a fiduciary? 

This should be one of your very first questions (if not the very first). You want to make sure that your advisor is acting in your best interest.

2. Tell me about your background. How do you work with clients? Give me a sense for what your clients look like.

Of course, you should learn more about the advisor’s background, credentials, and interests. Not only do you want to make sure that the advisor is qualified to do the job, but you also want to make sure there’s a good personality fit. During this conversation, it also makes sense to get a better understanding of the existing clients he or she currently works with.  Does it appear that he or she has the ability to advise on a multitude of different scenarios? Is there diversity amongst his or her clientele? Do you think you would be a good addition to the clientele?

3. What is the way in which you invest money?

The advisor’s response should provide you with insight on their investment philosophy, their offerings, and how they factor in risk, volatility, and of course, your personal goals and objectives.

4. What makes you and your firm different from others?

The reality is that investments is a commoditized business.  You have to identify what are some non-negotiables for you.  Ideally, you’re hiring an advisor that you hope to have a longstanding relationship with.  This person will ultimately meet other members of your family. Be prepared to look for some key differentiators the sets the advisor apart from others.

5. How many clients do you currently have?

The number of clients is important. It gives you an idea of their capacity and their ability to provide you with time and attention.

6. What are some of the services I should expect to receive from you?

Depending on the size of the firm, the services could very limited or, in cases where you’re interviewing a large institution, their services could be more than what you need presently. It is good to ask. As circumstances in your life changes, it is good to know how your advisor and the firm could be helpful in the future.

7. Who are other members of your team?

It is helpful to know all members of the team and the role each plays in your relationship.  If you are unable to reach your advisor, particularly in an emergency situation, you should have the contact information for others on the team.

8. How often will we meet?

Getting an understanding of how often you plan to speak to your advisor is always a great idea. It makes sense to set a precedent early on and establish the frequency of meetings.

9. How are you compensated?

This one may seem like a weird one, it is one that is often overlooked during the vetting process. It is always good to full have transparency on how advisors get paid.  Depending on the firm, some advisors are paid an annual salary, plus a discretionary bonus, while advisors at other firms are paid a percentage commission based on the assets the manage.  It is always a good idea to have a full understanding, particularly as you’re vetting managers, to have full transparency on how they’re paid.

10. What is your fee?

Understanding the fee you’re paying is a critical piece to your decision making.  Sometimes the fee discussion can get a little involved and confusing, so it makes sense to have a clear picture of the fees you’ll be paying to the advisor, plus the underlying fees you’re paying for each of your investments.