Although 69% of Americans believe they have a high level of financial knowledge, only 24% are able to demonstrate even basic financial literacy, according to a study from the National Endowment for Financial Education. Most aren't sure about their current financial picture, they are uncertain about the tax implications of major purchases, and they don't know what to do if they are audited by the IRS.
Unfortunately, the average CPA with 300 clients is often pulled in too many different directions to be able to offer much in the way of personalized financial advice. But a report from Accenture Strategy found that 45% of consumers are willing to pay more for better and more personalized service.
Today, more people are choosing to pay an annual membership fee in return for higher quality service, one-on-one attention, and advice personalized to their tax and financial situation. This concierge CPA model provides four main advantages over the traditional CPA model.
1. A Personal Financial Statement that Eliminates Guesswork
Businesses regularly use financial statements to gain insights into the state of their finances, so they can make informed financial decisions. Unfortunately, individuals and households rarely do the same, since most traditional accountants aren’t engaged to provide personal financial statements to their clients. But many concierge CPAs do.
A personal financial statement from a CPA gives you a detailed snapshot of your financial picture, so you can see how it lines up against where you actually want to be. By tracking your assets and liabilities, and measuring your cash flow, a personal financial statement gives you valuable information which can forecast your financial future and help you achieve your goals. After all, you can't know whether you're on track if you don't know where you are starting from.
2. Money-Saving Tax Advice When You Need It Most
Instead of helping you plan your taxes ahead of time, the average accountant is forced to sort out your tax situation after the fact. In effect, they operate as a historian of the numbers. Unfortunately, that is the least efficient way to approach your tax planning.
By virtue of having fewer clients, a concierge CPA is available to give you advice whenever you need it. That's especially useful when you're considering a transaction that could have heavy tax implications.
For example, when you purchase a car, you may have your choice of several different financing options. Which option will have the most favorable impact on your taxes? If you work with a concierge CPA, you can find out the long-term impact of each option before you sign on the dotted line.
Are you planning to buy a house? Most homebuyers have never brought a CPA to the closing, or asked a CPA to look over the closing documents. But the clients of concierge CPAs do.
Many concierge CPAs also have an after-hours number available so that you have uninterrupted access to money-saving advice whenever you need it, even on weekends and holidays. When making a large purchase, such as a vehicle or real estate, a single phone call can end up saving you a sizable amount of money over the long term.
3. A Stronger and More Effective Financial Team
The costliest financial blunders often start with a lack of communication. If a CPA is making assumptions about your financial plan which are not in line with the plans of your financial advisor or your attorney (due to the three of them not coordinating their efforts), you are the one who will suffer. Unfortunately, you won’t know about the miscommunication until probably 5 or 10 years from now when you have less options to get things back on track.
A concierge CPA, on the other hand, forms the core of a true financial team. Because they devote all of their time and energy to an exclusive clientele, concierge CPAs are able to meet with your financial advisor and your attorney to make sure everyone is on the same page (and if they aren’t, to get them onto the same page). Together, they can assemble a comprehensive life plan for your finances designed to deliver the results you want.
Investing in a concierge CPA should improve the tangible and intangible value you are getting from your financial advisory and estate planning attorney.
4. Built-In Protection from the IRS
Much has been said about the IRS conducting fewer audits these days. Between 2016 and 2017, the number of tax audits carried out by the IRS dropped by 16%. In fact, for the last six years in a row, the chances of being audited by the IRS have steadily shrunk. While the prospect of suffering an audit may seem remote, the truth is that someone will get audited. That someone might be you.
Your risk of an audit rises with your income. A household with $100,000 in income is 31% more likely to be audited than the average household, according to the Tax Foundation. Above $200,000, an audit becomes three times more likely. Above $500,000, you are eight times as likely to be audited.
Having a concierge CPA on your side means you'll not only be prepared for the possibility of an audit, you’ll also be protected. In the event of an IRS audit, many concierge accountants will cover the first $3,500 to 5,000 in CPA fees for audit representation. That certainly doesn't eliminate the hassle of an IRS audit, but it can minimize the pain (both emotional and financial) from it.
Why Everyone Is Talking About Concierge CPAs
The number-one reason 70% of Americans leave a CPA firm is because of poor client service, according to a Bay Street Group survey. Traditional CPAs are unfortunately often too busy to provide the high quality service that clients care deeply about. It is not that they do not want to or have the skill set to provide that information, they just have too many things going on in their tax practice and too many clients.
Concierge CPAs provide the premier services their exclusive client list values most: personal financial statements, around-the-clock advice, IRS audit protection, and one-on-one face time with a coordinated financial team. Many concierge CPAs also offer access to a network of additional services such as estate planning attorneys, trust companies, insurance providers, and other additional benefits to their members.
All of this added value typically costs less than the average American spends on coffee every year. That's why more people are choosing concierge CPAs. If personalized financial and tax advice is important to your financial future, then a concierge CPA may be right for you.