Adam, Jody, and I are joined by Rick Telberg from CPA Trendlines to talk about the shift towards virtual CFO services. The VCFO space is getting bigger, especially with the increase in online teams in 2020. This is such an interesting time, because businesses are required to change to adapt to the current landscape, and accountants are no exception to this. Listen to learn about the future of the CPA space and the virtual CFO.
Quote
“If we write about what people are talking about, then people are going to talk about what we write about.” - Rick Telberg
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Jamie Nau: Hello, everybody, and welcome to today's podcast. Adam, Jody and I are super excited for today's guest Rick Telberg from CPA Trendlines. I'm going to tell a quick story about Rick before I throw it over to him. He probably doesn't remember this, but when I was a manager at Grant Thornton about 10 years ago, we had the homework assignment of being active on Twitter. I actually started following Rick way back then. He was pretty big at that point. But the cool thing to me was, I followed him, and the next day I had a message from him saying, Why are you following me? What are you interested in? What kind of things are you looking for? I thought that was pretty cool with someone his size to reach out to just a small little manager at Grant Thornton. To be curious what I was looking for. So that was my first memory with Rick. Obviously we've been involved with him here at Summit over the last couple of years as well. So Rick, want to give us a little bit of your background and how you got started with CPA Trendlines?
Rick Telberg: Well thanks Jamie. It's great to be here. I am Rick Telberg for CPA Trendlines, and I've been doing CPA Trendlines for about 10 years. Before that I did some dotcom with the AICPA and something called ProtoNet, and before that started a magazine called Accounting Today. I've been in this business for about 30 years now, and it's been a heck of a ride. It's a terrific business to be in. Terrific people, fantastic standards and behaviors and ethical goals and objectives that really appeal to me as a journalist in this area, as an analyst, as a commentator and as a provider of what we like to call actionable intelligence.
Jamie Nau: Awesome. If you want to go into a little bit kind of how you created your content, like I said, I appreciate you reaching out to me back then. I'm sure you did that with most people. Is that kind of how you got what content was interested to most of the CPAs out there?
Rick Telberg: Well, Jamie, we figure that if we're writing about what people are talking about, people are going to talk about what we write about. So we depend on people like you to tell us what's going on in the business. When you tell us what's going on in the business and we replay that for our readers and followers, they respond to it and it becomes a kind of snowball effect where we actually get into a conversation with our audience and the profession in general. I'd like to think of CPA Trendlines as a tavern, a bar, saloon, a place where people can go and hang out and talk, drinks are involved.
All: Laughing [inaudible]
Rick Telberg: And at this tavern, you get to meet new and interesting people and find out things you didn't know before. It's a friendly place to share information.
Jamie Nau: Yeah, I definitely feel that way about your website and your Twitter. I see a lot of the articles you post out there, a lot of the links, and you can see all the conversation that's happening there. That is definitely very important to me as a CPA. Want to go little bit into the space we're in? The VCFO space and some of the trends you're seeing there and some of the conversations that are happening in that area right now?
Rick Telberg: The virtual CFO space is really hot right now, and it is almost by necessity because of the age we're living in now. The coverage that all of a sudden has just exploded. It has threaded together the themes of client accounting, and the move toward advisory work and the necessity to work remotely or virtual. That virtual CFO services, this is the time. This is the time for virtual CFO services. If we can't do virtual CFO services in this kind of market, in this kind of age, with these kinds of tools and our kind of training, then we'll never be able to do it.
Jody Grunden: What do you think holds people back from it? Because you get all these people that you know, I've spoken of many different seminars over the last few years, and they come to me like, oh, this is great. I love what you're doing. And then they always make an excuse why it's not going to work for them. What do you think is truly holding some of those firms back?
Rick Telberg: Two things. One is they're making plenty of money doing what they're already doing. And most people in our business are making more money than they ever thought they would. Most people in our business are the stars in their family. The many people in our business are the first generation to go to work in a white collar business, let alone a profession. The sons and daughters of accountants will become lawyers and doctors. So many accountants are making more money than they ever thought they would, and they're very comfortable. They don't want to mess that up. They have client relationships that go back many years and it's something they treasure and just really don't want to mess with. The other factor is the scare. Any kind of change is going to require a couple of things. It's going to require retooling, which is not an insignificant investment when we have a limited amount of time. It's not an insignificant investment when we already have the tech platform that we're comfortable with. It's not an insignificant investment to launch a new service line. I think, third, they're just kind of shy about approaching clients or prospects, with something new that they are still learning. Accountants need to do the work in order to do the work. They're going to learn on the job. That's the most painful, expensive and trying part of being an accountant. Getting the skill set, getting the background and understanding the processes and procedures, and then being able to talk about it authoritatively. Accountants are very reluctant about trying to be prescriptive, trying to tell a prospective, a client what they need.
Jody Grunden: What do you think that it is? Because they've got the answers. They know the books better than the client does. They know what they're doing right and wrong. So what's holding them back from doing that? You think it’s just themselves?
Rick Telberg: Well, there's two things. One is that it's not something they teach in accounting school. There's no accounting curriculum that teaches you how to run a business, which is kind of amazing actually. That you don't get basic business principles by getting a degree in accounting. You don't get advanced lessons in strategy or leadership or management or entrepreneurial skills. So it's kind of interesting that's not part of the curriculum. It's also barely part of required CPE. So it's not something that the profession itself seems to value. Another factor is that a lot of people got into accounting because some teacher in high school, or some guidance counselor said, hey, you're good at math, be an accountant. And people got into it because they liked the work. They liked figuring out the problems. It took a while for some of them to figure out that they actually liked the clients. And the people who were most successful in this business are the ones who actually build a relationship with the clients. The most successful accountants are the ones that really care about their clients. The ones that really care about their clients, who can have those personal conversations with their clients are the ones that are best positioned to start to provide new services. It's a skill that has to be acquired. It takes small baby steps to start to build the confidence level that you have the skills to do that. You have the relationship to do that, and that the client will accept it. That might require some rejection. If you're suggesting something new. It might require some new level of pricing, some new pricing formulas that violate, you know, our adherence to time sheets. So all of these things combined to sort of create inertia in this business against any sort of change or progress.
I think that one of the dynamics that's happening right now in this business is that people have to change because of the economy, because of the pandemic, because of the surge of technology, and because of the competition in a way from fin-tech and non CPA accountants and non-accounting accountants. Because of the new landscape, new competitive landscape, accountants have to change. They can't afford not to. And so they're being pushed, or actually pulled by their clients into all sorts of new things. For instance, no accountant ever dreamed they'd be doing PPP paperwork.
Jody Grunden: That's right.
Rick Telberg: So now accountants are doing PPP paperwork, but are they the tax people? The accounting people, the forensic people, the audit people? It's kind of interesting that one firm I know lost its litigation support business. They found that those people were happy to be really good at doing PPP work. So they shifted the litigation support people who were steeped in forensics to work in PPP. So they could be tax people. They could be audit people, they could be forensics, they could be consulting. What's interesting about the new phenomenon of PPP is that it's drawn on multiple disciplines of accountants. It's drawn on their relationship and bankers, for instance, that they didn't know they could leverage in this way. So this is a really interesting time to be doing virtual CFO work. It's a terrific time to be doing virtual CFO work, and it's also absolutely necessary. So even though there's resistance, their clients won't stand for it. If a client needs virtual CFO work and their accountant isn't going to deliver it, there's plenty of other accountants out there.
Jody Grunden: Yeah to that point, it's amazing how many times we will be in a sales call with a new prospect who found us on the web, and when we ask the question, why are you leaving your existing CPA? They say, well because they don't offer the service. We are like, oh but they could easily do the service, no doubt about it. They just don't offer it in their in their toolbox of services. Then you ask, well how much are you currently paying for your CPA? They say well they meet with us quarterly, or whatever, and maybe it's four or five thousand dollars, and then when we talk to them, we are like okay. Here's what we're going to offer. Here's what we do. Here's all the different things we offer, and it's going to be sixty five thousand dollars. A lot of times like, wow, that's cheaper than I thought it was going to be. They just went from a CPA that maybe had a hard time even upselling from a five or ten thousand dollar service, and there's no way they thought that they'll ever want to want to jump on a 60 thousand dollar service. And in reality, that's really what they want. They want more than just, you know, tax work. They want more than just auditing work. They want more than just a bookkeeping. They want somebody that's going to actually help them get to the next stage and prevent them from things that did happen in COVID. You know, how could you prevent that? Well if you had a lot of cash in the bank it wouldn't have been as bad. That’s the guidance they are looking for. We're getting tons of calls right now from clients out there, you know, CPA firm clients that are looking for more than just an accountant. I think you hit it right on the nose. This is the perfect timing for it.
Adam Hale: Yeah it seems to me, we just suffer from being able to define it and put it on paper, because I think that most CPA firms do this. They just do it not deliberately. They don't package it. They don't have the forced meetings. It's usually, ask me I'll shake the eight ball and tell you what the answer is. So I think almost all of them do it. Whenever they hear about it, I think it's really confusing out there, the terminology, because you have like systems for back office systems. You have you have cas, which that to me, cas is bookkeeping. That's really what it is. Then you hear fractional CFOs. Well fractional CFOs to me have an expiration date. They serve a purpose. You come in, you sniper situation, even part time CFOs, or usually whenever they're just like fill is. So you're like solving for a time problem whenever there's a gap. With us, what we're trying to do and I mean, I'd be interested in hearing your feedback on this Rick, is just try to create what virtual CFO services actually mean. It's advisory services delivered in a very deliberate way. Then I think what I hear mostly whenever I'm talking to CPA firms, is they just don't know how or what to talk about and when kind of on a regular basis. They have all the information. They just don't know how to, because we're very system driven type people. How does that fit? Because we have the litigation support department. We have this, like it just feels like we just need to do a better job of defining what VCFO means and separate it from all the other kind of terminology that's floating out there.
Rick Telberg: I think you're right. I think one of the things that Summit is doing in this marketplace is defining virtual CFO services very specifically, and differentiated from fractional CFOs, and client services and bookkeeping and accounting. You've been able to put together a package that defines what virtual CFO services are for this marketplace. No one else has been as clear in drawing the lines around virtual CFO services as Summit CPA right now. You're definitely the market leaders. Congratulations to you.
Jody Grunden: Thanks for sure.
Adam Hale: We appreciate it. I think that's just it. I just feel like if you name it and then even if you don't really buy into our exact methodology, it doesn't really matter. It's kind of like just putting that framework around it and really being business advisor first and accountant second. All the CPA firms that I talk to, I feel like they all have the ability to do it and they have the relationships with the client to do it. But for some reason, you know, you kind of hit on a lot of the reasons why they don't proactively give that advice. But I think that's important in framing it out and kind of forcing that conversation.
Rick Telberg: I call it the accidental accountant syndrome. The first time an accountant does something new and the client likes it, it was by accident. And if you're smart about your business, you'll figure out a way to try to do it again.
Adam Hale: Yeah, that sounds actually like us.
All: Laughing [in audible]
Adam Hale: Hey guys, this actually works. We should talk about how to do this across the entire team. So, yeah, we're very familiar with that. Good to have a name for it though.
Jamie Nau: So my next question for you is one of the problems we have with hiring and I'm not sure it's necessarily a problem, but one of the obstacles we run into is who is the right fit for this services? We interview tax people, we interview audit people, we interview people from industry, bookkeepers. It seems like we've had good luck with all those, and bad luck with all of those. So I'm just curious, what type of firm is the best, or are they all good to take on this type of services into their firm?
Rick Telberg: Thanks for the question, Jamie. It kind of dovetails with something else that's going out on in the business, which is some of the best hires are not accountants at all. We can teach people how to do accounting. We can't teach them how to develop a good business relationship. They have to have a knack, a feel, an instinct for building a business relationship. They have to have some experience or some insight into how a business operates and how an owner operator thinks through their problems in the business. So we can teach almost anybody to do accounting, especially with the tools we have now. What we're learning is that we need people who have skills we can't teach them. Skills in management, analysis, leadership strategy, marketing and all the technologies that are involved in the day to day running of a business. So the kinds of people that we're looking for in terms of hiring are not necessarily accountants. And in fact, twenty five percent of the new hires going into the largest firms are not accounting graduates at all. I think smaller firms are beginning to understand that. I'm seeing more and more acquisitions among mid-sized firms of non CPA firms.
Jamie Nau: That makes a lot of sense. I feel like when I moved to Summit, I turned more into a finance person than accounting. Sometimes when I was a CFO, I'd go months without doing any actual accounting work. I was just talking business and I was doing those type of analysis. I definitely leaned away from my accounting background and had prior to that.
Jody Grunden: Even to the point we've hired a marketing director, we're hiring marketing people, which is not very common in accounting firms. You know, it's not until you get to the 15 million dollar stage, or the 20 million dollar stage, you have a director in marketing. You know, we had one when we were 5 million dollars, and because of that we're going to be at 7 million dollars this year and 10 million dollars in a couple of years just because that's so essential in the whole process. So not just the consulting type person that may or may not be an accountant, but other parts of your company. The marketing, the finance, the accounting.
Adam Hale: The ops team. You know, we've made big investments there as well. So yeah, it just it takes a full, full mix of people. We've even hired a non CPA to be the CFO. So you know, just recognizing that it is those innate soft skills or business skills and somebody to be able to tell the right story and lead a client is more important than understanding which side the debut and credit is. I mean, don't get me wrong, like some of that stuff's permission to play. But our clients kind of expect that we know that stuff about accounting. But what they really want from us is what would you do? You know, you're the finance person. So a lot of times we lead our client conversations because I don't want to say hey, I know how to do plumbing better than you, or roofing, or whatever. You know, the conversation a lot of time is more financially speaking, this is what we should do. I think clients really appreciate hearing somebody in their ear saying hey, I get it from a financial perspective, this is the right way to go. But you know that in mind, I think I'm still going to go this way, but I'll keep that in mind as I go. Or, of course, let's go left, not right. So having that consultant voice is important. I don't know that it matters that if you're a CPA or not.
Rick Telberg: Adam, Jody, I hear what you're saying. The fact is accounting will take care of itself. It'll get done one way or the other. The tax returns will get filed one way or the other because we have the deadlines, we have the systems. We can do them in our sleep. Sometimes we do. We really need to focus on other things beyond taxes and accounting. The things that move us to the edge, to the out of the loop and beyond. The things that clients don't take for granted. They take for granted that their taxes will get filed. They take for granted that they'll get a monthly P&L. What we need to do in this business is learn how to surprise, dazzle, amaze our clients in ways that they didn't know they needed until we brought it up.
Jamie Nau: I think the interesting thing too, is we just hired a project manager to be our onboarding specialist, and I think what she does really well is she looks at the problem from a different angle. So she's asking our accountants and challenging our accountants all the time. Asking why are you doing it like that? And the first answer is always because, that's what we've always done it. She's really been able to push that button and ask a lot of questions. I think we've seen more growth in a lot of processes in the last nine months since we've hired her than we did for a while there, just because we're looking at things in different ways. I think that's another benefit of that area.
Jody Grunden: No accounting experience.
Jamie Nau: Yeah, no accounting experience.
Rick Telberg: And Jamie, when you bring in people from other disciplines, they come in with other perspectives, and you get the best of all perspectives in all disciplines and everybody's background when you can bring in people with as diverse a skill set and background as possible. If you're good company or good firm, good managers, good leadership, you can learn how to blend those things together.
Jamie Nau: So I'm going to take a quick second here to throw our email address out there. I want to make sure people can reach out to us. We're always looking for great guests like Rick. So if you want to be a guest on our show, or if you have a topic you want us to discuss, we'd love to hear from you. So that email address is: cpa@summitcpa.net. So we have couple of minutes left here. Rick, want to throw some contact information out before we get to final thoughts?
Rick Telberg: If anyone wants to reach me you can find me at CPATrendlines.com. You can find me on Twitter, Facebook, LinkedIn, but you can always find me at CPATrendlines.com.
Jody Grunden: And why would they reach out to you, Rick? Why should somebody reach out to you?
Rick Telberg: Well, I'm always looking for new voices. I'm looking for people who have something to say. That is fact based and strongly articulated. I'm also looking for questions. What questions do you have in running your practice or moving to the next step? What solutions are you looking for? Because those help shape what we put into CPA Trendlines. Your questions are probably more important than any of the answers that anybody can deliver for you. If you ask the right questions you get the right answers. Every great idea starts with a question.
Jamie Nau: That's awesome. That's the recipe for a consultant to you. We heard that very early on when we started going down this path. Just ask questions. Adam says it all the time. You just have to ask questions. A lot of times it gets you in the right direction. So that's a great, great tip. So any other final thoughts for our listeners? Again for virtual CFOs out there, bookkeeper's out there. Anything else they should consider?
Rick Telberg: If anybody was thinking about making a move, now's the time to do it. Whether it's virtual CFO services or half a dozen other possibilities. But virtual CFO services is obviously one of the hottest things going on in this business right now. If you want to learn how to do it, Summit CPA is a great place to learn how to do it.
Jody Grunden: Oh, thank you very much. Appreciate that.
Adam Hale: Yeah and Rick, thanks for everything you do for the industry, both professionally. As Jamie said, you're a resource for a lot of people. And it's really cool how you're able to pull that content up and help answer those questions for people. But also, personally, you've been a big resource for us here at Summit and for Jody and I especially any time we have questions. You've always been very helpful and so definitely appreciate your time and everything you've done for us thus far.
Jody Grunden: Yeah. I just appreciate you being a friend. Thanks for being a friend. You've been a great friend for the last few years that I've got to know you. It's been a great relationship from the time we met in a bar in New York City to now we're meeting virtually.
Rick Telberg: Jody, Adam, Jamie, thank you very much. Jamie, see you on Twitter.