Today, we sit down with Adam Hale and David Bergstein, the Chief Innovation Officer of Bergstein CPA. He is an author, blogger, speaker, educator, and advisor to CPA Firms who is dedicated in helping accounting firms grow their Client Accounting & Advisory Services practices. He calls himself "A Millennial Trapped in a Baby Boomer's Body" in this episode, we will understand why so and also, why he passionately believes moving to the cloud and adapting quickly to technological changes are important for accounting professionals and CPA firms.
"I think the future of accounting is automation and advisory services." - David Bergstein
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Jamie Nau: Welcome to today's show. I am very excited about today's guest. I know normally I don't do a ton of introductions, but I was looking at our guest’s Twitter today and I wanted to make sure I read his introduction because it says he is a millennial in a baby boomers body. So I'm going to make sure he explains that to us. But our guest today is David Bergstein. David, why don't you tell us a little about yourself. And again, welcome to the show.
David Bergstein: Thank you very much. I consider myself a millennial and a baby boomers body because I'm young at heart, even though someday I'll make the top 70 over 70 as opposed to the top 40, 40. I've written a book, Becoming a Rainmaker, A Guide for Accountants and CPAs, because no matter what you do in the CPA profession, if you think you're the best CPA out there, you know all the answers to super technical things, that doesn't matter. What matters is how you relate to the client and if you can sell your services to the client. Selling your services to the client means listening to them and asking them what keeps them up at night, what are they looking for, and what are they trying to sell so you can solve it? So I consider myself an author, blogger, speaker. I teach college accounting. I've been doing it for 30 years. I like helping people come into the profession. I think that's the key to the future. Also an avid pickleball player. So if anybody wants to understand what that's about, they'll have to call me personally. I've created a new website. I have my Bergstein CPA traditional website. I do accounting. I'm a solo practitioner. I keep trying to whined that down, but I have a few good clients and it's hard to give them up. So I've switched from doing the accounting for them to automating it, and doing advisory services. So right now I created the website taxmaven.com. I'm all about helping other CPA firms know their client accounting tech stack, and trying to help them understand what client advisory services are and how to sell it. I recommend your firm’s website to everybody that's an accountant, because I want them to see what you are doing. I know you have the book and the course. The bigger groups I tell them to look at that because I think the future of accounting is all about automation and advisory services. I love what you have, which is transactional, controllership, and VCFO services. Somebody was talking to me today all about how you should sell. And this is someone who is demoing a software product. And so we don't talk about the software product. We talk about the process, how we help the client through the advisory services, which fits in with your three choices. People see the three choices. Too expensive, too cheap, goes in the middle, and then they become a client for a number of years because you keep on upselling it. Even the way you have your transactional website. Nobody really wants to do the transaction processing, but you upsell them to other services. So that's why I look at you pretty much. Even though I've worked with top 100 firms, you hit it right. You went to it the right time. I'm not selling your firm per say, but it's just when someone asked me, tell me about things to do, I always bring up your website. It's a couple others I bring up.
Adam Hale: Well we’re the top.
All: Laughing [in audible]
David Bergstein: I think you changed it a little today. Today I was showing someone because he was telling me that the sweet spot for most advisory services from the CPA firm is the five to ten million dollar range. After that, they actually want to controller on site, most of the time. So in your chart, you have the different the number of businesses in North America and then you have the different breakdowns for the services. Do you place CFO first so they can have full time CFO, or is everything you do through the outsourced virtual CFO?
Adam Hale: Yeah, everything's fractional, and that's by design. The reality is everybody needs a little bit of a bookkeeper, a controller, a CFO, and then even like the outside perspective from tax. The problem we run into, is clients a lot of times are like hey, how come my bookkeeper can't run my cash? It's like, well, because they are a bookkeeper, they're not a controller. So then they upgrade and they hire a controller and say, hey, how come my controller, who I pay pretty well, can't handle my financial strategy? And it's like, well because they are a controller, not a CFO. So then they hire a CFO. So first thing they want to do is hire a bookkeeper for a controller. So now I've spent a lot more money, and then I need somebody to do the day to day. So the reality is it's like these businesses, and for us that's a sweet spots from like one to 20 million in revenue, but they need a little bit of all of these roles. Some days they need 50 percent of one and 30 percent of the other. The next week it flip flops. So by us being able to give them a subscription to a finance department and that's what they're really doing with us, we value-based all those service items. But the service itself is more subscription based. They are subscribing to our service. Then if they need to plug and play different people, that's part of our service package and that's what we do. So no, we do not plan on anybody full time. It’s always fractional because we know we're going to be able to scale. Now once they get over 20 million, we do have some clients that way, they typically do have somebody in house. Then our role switch is more like an FP and A role. So we're doing the financial planning and analysis because a true CFO of a large company, their job is just to go get money. Like, that's the number one thing they do. They're not really in the weeds helping out with finance.
David Bergstein: What I like about what you are doing, and this is what I'm telling people also, is it's really the frequency of contact as to what level of service they're purchasing from the CPA firm. So when it comes to a transactional nature, even when you're selling them your full setup, you're giving them a little bit of bookkeeping for some weekly work. And that may not be you, Jody, it may be other people. Then you're working them up the line. So you're really giving them, and this is what I think is great and is what I'm telling people, your frequency contact and that's why you get the value that you are with the value of billing because what somebody is doing a little bit of the bookkeeping, somebody is doing that cash management maybe at the end of every week or every other week. And then the CFO might be coming in monthly for a strategic meeting or a sales forecast or a pipeline type thing. So I think that's excellent.
Adam Hale: Yeah it's pretty full service for sure.
Jamie Nau: I think that you hit on a great point there. I think the quality of touches and the quantity it touches are both equally as important. I think that, you know, a lot of times either when we're hiring a CFO or as people are going through the course and having our fireside chats, that's one of the questions that come up a lot. How am I supposed to meet with people weekly? What am I going to talk about every week? How do I bring that silver bullet to the clients? I'd love to hear kind of your perspective. I know you mentioned a couple of things there. I'd love to hear your perspective on this. When you're talking to client what types of services and what types of conversations should you be having?
David Bergstein: Well, that's a great question. But if I, as the solo practitioner, want to keep my level up, I want to be the CFO type, I have somebody else a part timer communicating with them weekly. So I'm not going to do it weekly. There is where we split it up. And you've gone from I think a five person firm to over a 60 person firm with people outsourced. So my weekly person is going to be handling the transactions if need be. Whereas I might come in and make sure cash, accounts receivable are in and out. But I'll even let somebody else do that and talk to them. And I'll come in when it's strategic to go over a dashboard at the end of every month. Because, you know, the way I look at it is this is where you get to bill the higher numbers. And this was someone I was talking to today. He was saying when he sells his cash flow services and why people should use them, he says you got to expect an average of 50 hours a year with each client if you want to get the value billing. That seems like a lot. But when he went through it, the weekly contact is may be twenty minutes a week. So Twenty minutes a week times 52 weeks from a lower level person for maybe an hour a month. Then as you move it up 50 hours it is not that much time especially if you're not doing it. So looking from your course, I was auditing it. You know, you're throwing those things out there, especially with the videos where you're sharing the different ideas and. And what I think right now is that it is a great time to be a solo practitioner or a small CPA. When you look at the forty one thousand six hundred firms, AICPA firms out there, top five hundred. But after you get by that top five hundred, most firms are under 20. And when these firms are under 20, they can move like a speedboat and make choices. These large firms with all these political things, it's taking them time to adapt to this new paradigm. The larger firms want to be truly professional service firms. As a solo practitioner, I want to be that too but my niche is going to be smaller because I'm not an expert on a lot of things. But I can bring people in. Summit as grown to a point where you can have different niches. But as a solo practitioner, I can bring people in, I can adjust. But what's really starting to confuse everybody is the number of choices for different apps. Everyone selects what I'll call a platform. It could be Zero. It could be QBO, could be Zoho. It could be Freshbook, could be accountants world on the small to mid-level. Or you look at NetSuite on the other, depending on the size of the firm, you're going to have two platforms, small and large, or you're going to pick one. But after the platform, what do you add on to? There's got to be a point where we stop adding apps and when you adopt, it's all about the process, what problem are you trying to solve and what tools are out there? You know, you look at Zapier now. Everyone loves it because it can connect and makes things easier, but it's still only so many apps that you can buy as an accounting firm.
Adam Hale: We're trying to test that limit right now. Seems like we go through a lot of them and we also, you know, we're always wanting to find a better way to automate. What I think's really cool and I will call you out on your age because you said it first. Being a millennial, I think it is cool. And a lot of people listening to this is probably heard you speak that you are a cloud evangelist and that's really what your focus is. I think that's really cool. As it relates to that, I mean I know that's how you help other accounting firms, too. So people listening that want to figure out how to get into the cloud and what tools to leverage, I mean, is there a preferred tech stack or is it really just kind of best in breed? Is there an all in one solution or does it really just matter like what I need and what problem I'm trying to solve? So you're going to suggest it.
David Bergstein: You hit it on head. It's really what you need and what problem you're trying to solve, because there's not that much of a difference a lot of these. You know, there might be a preferred stack based on what the platform is you're using. You know, if you're using QBO there might be tools that integrate better with them versus Zero. Same thing. If I'm looking at any of those tools, nobody has it all because everybody has a marketplace or an ecosystem. Is there a best in breed? Used to think that way back when, like I said, I'm old. I sold a product called Fast Tax, which was the premium tax application that was out there, eventually bought by Thompson. I can honestly say I probably used about 15 to 20 different tax software’s in career and most of them solved the need for my clientele. When I had consolidated the returns I had to choose one versus another to make it easier, but they all could accomplish it. It's a matter of cost and how much time you want to pursue. But I think every accounting firm, even your firm, you have your preferred playbook right now, right? You prefer tools. You have it all documented, that is the key. A documentation of the process so anybody can step in and see what they're supposed to do. But I think all firms need to have an application employee. Call them a chief application officer, or call them an application search specialist. I think each firm has to look at what's coming out and maybe make changes no more frequently than every two and a half to three years. If you're doing that, you're going to screw up things in between. But technology is changing so fast. I look at tools like [in audible]. One is human assisted artificial intelligence because that's how they advertise it. The other one is advertising total automation. I'm a believer and I don't want to outsource. I want automation. So I'm looking at tools that go that way. I evaluate them based on the fact that I call five or six firms that are using those pieces of software after I look at a demo and play with a little bit of. If 3 – 5 of them I call say they like a product, they think it's a pretty good product, I believe them. There's always going to be naysayers who don't take the training or don't understand it or not know what to do.
Jamie Nau: I guess my follow up question to that is you kind of walked through your process of doing some walkthrough demos, and then asking three or five users. Would you recommend the same for an accounting firm? I'm thinking about doing this.Or would it be different for me as a sole proprietor?
David Bergstein: No as a sole proprietor you should be doing it. I'm chair of the FICA. We have a portal out there where people are asking hey, I'm looking at this software give me some opinion. You'll see 10, 15 people, mostly good, some bad, you know, if enough was saying good, you got to take a look at it.Every solo practitioner, if they're worth their salt, belongs to an organization. It could be a state society. It could be a network of people. You don't have to be a CPA. There's all sorts of organizations for accountants and bookkeepers. Go to your sources. I work with these large firms at some of these associations. One wants me to do a presentation for them in the May timeframe.They want me to be unbiased and honest when people ask me my opinion of various pieces of software. They want to see a demo of Zero, Intact NetSuite and QBO. What am I doing? I'm calling up their members that use these products and saying, hey, you member firms want to know about that. I know you're using the product. You want to do a demo? You want to help your member firms? Rather than calling a sales company. So I recommend to anybody, ask the group you belong to.
Adam Hale: Yeah, that's great advice. You can also run point for a lot of firms as well, right? Like they can bring you in just to kind of help sort out what a good solution is for them and help them map out that stuff as well?
David Bergstein: I do. I'm working actually with one of the associations that an affiliate called me in for a pretty large firm, and then I'm going to do a consulting on a monthly basis to help them. But they may need more than me. So this is where I look to other firms that I see out there and say hey, here's something for you because the opportunity is something you've got well documented. You've got the system in place. It may be more ideal across the board, but, hey, I start with them and then I pass them off. I'm not looking to grow my business. I'm looking to help people at this point. Kind of strange situation. I'm torn between like every old CPA when they passed the millennial status, you know, should I retire at sixty five? Fifty five. Seventy five. As I move to this platform, you can only do so much bike riding pickleball, I'm not a golfer. You can only go out to breakfast with the guys so many times. And when you stop, if you decide to stop completely, you really got to walk away from it because you lose your knowledge base. So every day I'm out here trying to learn more because that's what it's all about. If I'm going to transmit information and help people. It's just firms don't spend the time educating themselves. They hear, hey, let's do this, let's do that. But then to really investigate, they don't in all cases.
Adam Hale: Yeah, probably not to the extent that you just said. I did write down chief application officer. I like that. I like that terminology. That's why I say like having somebody and obviously we know and we see a lot of the content that you put out. So we know that you're hitting that stuff up pretty heavy. I like the idea about, like leveraging your association for ideas and tips and stuff, but then also just knowing that there's a resource out there like yourself, that can also kind of help, you know, because I know you're also doing a lot of that groundwork. Talking to people that are actually using it, not just the sales team, you know, that kind of thing, too. So that's really helpful to know.
David Bergstein: It's an interesting thing, you know, having been on the sell side of it for so long. You know always be selling, always be closing. Everyone's trying for that, but people want to know more at this point. Actually the sales process has changed so drastically because of this pandemic. I believe a lot of these larger companies that had boots on the ground in every city are going to start to draw back the boots on the city because more and more people are making their decisions by looking on the internet. Researching it first. Then when they talk to someone it could be done on Zoom. You still need face to face and you still need closing when you get to a certain point, but more and more can be done as the technology is improved in this remote space. I call it the next normal, the new normal. People aren't going to go back to real estate.
Adam Hale: Yeah, I'm sure there's people that are thirsty to do that. But I agree. It was a little bit foreign concept whenever we did it, you know, 10 years ago. Now it's become pretty much the norm. I agree it'll definitely be heading in that direction. But in addition to helping with that cloud stuff, I did want to hit on, you also help firms think about being more advisory as well, right?
David Bergstein: Yeah. To me that's the main thing. Building the teach stack, that is helping to automate. So before you can focus on advisory, and you may have to change your personality, maybe hire a different people. You got to automate first. That's the simple part, if you want to do it. You're going to say, I can't do it, I can't do it. Somebody I spoke to over the last couple of days said they're bringing a new product out. I showed them what the market consisted of, in this particular case between Quickbooks Online and Quickbooks Desktop. They want to do real time accounting. I said I wouldn't focus any money on that because the people that are staying on desktop and the accountants who are servicing them and not moving over don't really see the value in this stuff, and you're wasting your time because they're not going to raise their prices because if they really understood it, they'd be moving their clients to the cloud off desktop. You know, it's still a great market in desktop if that's what you want, but the future is all about online. I believe that accounting firms, I think you've done it already, it's not about just the advisory service. It's not about client accounting. It's seeing what goes on in accounting real time allows you to offer different types of advisory services. It's not just about liquidity, solvency, staying profitable. It's about succession planning. It's about wealth management. It's about how to grow the firm? What's your sales strategy? Accountants should be well versed in how to calculate these things. I'm teaching managerial accounting this term, and I used to hate cost accounting and managerial accounting, but really that's helping businesses make decisions. That's where everything is all about making choices. Accountants have to focus on what they learned in school. You know, we always took a course, passed the CPA exam from book knowledge, and didn't use half that stuff. Now it's coming back that there's a lot of skills we have other than tax and audit. Let's use our minds to be analytical and help our clients.
Adam Hale: You're right though. It does start with being more in touch and being able to have access. If you are doing real time and you are accessing their stuff in real time because of the cloud computing, all that stuff is, you know, has a lot of interplay there that just enhances the advisory services and really promotes it and almost demands it. That’s why I say I think the tech does kind of go hand in hand with the ability to help out with some of that advisory stuff.
Jamie Nau: So just real quick, we're getting a little close on time here, so I wanted to throw our email address out there. We love having guests like David on here. So if you want to be a guest or if you have questions or topics for the show, please email us at: vcfo@summitcpa.net. So David, I'd love to hear some final thoughts from you and Adam as well.
David Bergstein: I'm here to help people. To me, it's two things. It's all about the process and that process is advisory services. To get there you have to automate what you're doing, change the services that you're selling. And you've done that well with you have on your website about the process. You're great with putting different content up every week. That's what attracts the clients. When a client sees a blog post out there, it's interesting and makes them think, maybe I should call that firm. You're not selling the service you're doing what I call advertorials. You're doing education. The future of accounting is changing. Accounting is never going to go away, it's always going to be a process of recording, sorting, summarizing, economic data through automation. But the key is at that point, doing the advisory services to help your clients make great decisions.
Jamie Nau: Yeah, definitely. Adam, final thoughts from you.
Adam Hale: I can't do better than that. You're a rock star. Obviously, you're a big name in the industry. Appreciate having you on here. We always appreciate your support in everything that we're doing, and look to us as a being a resource to helping figure out automation, and just helping us change the way people think about accounting. So appreciate you being on.
David Bergstein: Thanks guys.