Many tax professionals had to step outside their normal return preparation wheelhouse to help their clients’ businesses survive the pandemic, and that enhanced advisory role might be here to stay, according to a recent survey.
Ninety-five percent of respondents in a Thomson Reuters Institute survey of tax professionals said their clients now expect them to offer broader business advice to some degree, as opposed to just filing their tax returns.
That’s especially true at larger tax firms — those with 30 or more employees — where 91 percent strongly agreed that their clients want business advice, compared with 76 percent and 51 percent of medium- and small-size firms, respectively, that felt the same. And yet only 29 percent of the firms represented in the survey offer business consulting services.
“The study’s findings underscore that taking on more of an advisory role is the future of the profession,” Thomson Reuters’s Charlotte Rushton said in a statement accompanying the February 8 release of the study. “We saw this trend explode onto the scene last year for many of our tax and accounting clients as the pandemic wore on, and we strongly believe this will continue to be a demand from their clients this year and in the future.”
Cari Weston of the American Institute of CPAs agreed and said that in her own organization’s informal surveys of tax professionals, one of the “resounding pieces of feedback” it received was that tax professionals struggled to keep up with their normal tax and filing work because they were doing so much advisory work in its place.
According to Weston, one of the biggest drivers for that phenomenon was the arrival of the Paycheck Protection Program’s forgivable business loans. Clients turned to their tax advisers to help them determine whether they were eligible for the loans and how to apply for them, and later to determine whether the loan qualified for forgiveness and the associated financial and tax reporting aspects of that.
Tax advisers “are your financial primary care doctor,” Weston observed. “They know your whole picture, everything that’s going on, and who better to advise you on your financial situation than that guy who knows everything about you?”
Questions about the PPP loans also naturally led to questions from clients about how they can stay open or operate remotely, how to manage cash flow and budgeting during the crisis, and more, Weston said.
Weston added that she hoped tax advisers don’t snap back to their pre-pandemic norms of limiting their services to just return preparation and advice. “I think CPAs have much more value to contribute, and I hope that through this opportunity that they realize that,” she said.
And thanks to the pandemic, tax advisers “got shaken up a little,” Weston said. “They were forced to go, ‘Hey, I am already doing this, I can do this.’ I think it helps them develop their confidence moving forward,” she said.
Coach’s Corner
The results of the Thomson Reuters survey indicate that while some tax advisers are eager to take on the business advisory role, that anticipation isn’t shared equally throughout the profession.
Fifty-nine percent of respondents said they were highly confident giving business advice. However, younger professionals and women were significantly less likely than men to respond that they were “highly confident” giving business advice, the survey found.
Thomson Reuters’s Keith Nichols acknowledged that accounting firms may be reluctant to branch into business advisory services, but said they’re also “often the most trusted people in their client’s ecosystem,” and that they have the skills to build on that trusted relationship. The trouble is that “they do need tools and coaching to get over the initial hump of setting up and offering advisory services,” he told Tax Notes.
Weston said that tax practitioners shouldn’t consider it a big leap to offer business consulting services, observing that they typically already have the skills and technical expertise to provide valuable input, but they may just lack the confidence or simply not know how to sell those services. In that case, they should look to business development training, she said.
Weston also suggested that tax advisers who are unsure of how to step into this new role consider joining an industry network or organization for support and advice. “Peer-to-peer networking is really critical, especially for the smaller firms [where one] can’t walk down the hallway and talk to somebody,” she said.
Both Weston and Nichols noted that while larger firms may have a head start in providing business consulting services, tax practitioners from small firms and solo practitioners should also be able to thrive in that role.
For small firms, their size is actually an advantage, according to Weston, who said that they can more easily and quickly adapt. “Evolving is so much easier the smaller you are, so I think there’s more opportunity,” she said.
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