More Delusion than Illusion

The other day (ever notice how many of my columns begin with those three words?) I received a call from a sole practitioner in the New York area who, as he nears 70, was thinking not of slowing down, but rather inquired as to whether I had any opportunities for him to absorb.

Seriously.

He thought that a young owner with a smaller firm would be willing to merge in with an elder statesman who obviously gave little or no thought to client transition or a buyout.

I thought to myself that this was as self-delusional as buffoonish New York Mayor Bill de Blasio declaring his candidacy for the Presidency in 2020. And had about as much of a chance of succeeding.

But my warnings fell on deaf ears.

He had no intention of slowing down anytime soon and certainly had no one in his firm to take over when he ultimately did decide to slow down.

That’s what colloquially is known as truly a man without a plan.

Not to be outdone, literally a day later I was contacted by a practitioner in New England with basically the same scenario, - in his mid-60s, no one on his “bench” but stubbornly refusing to consider merging up.

More than a Remote Chance

Back in high school I had a friend whose father was, often, home, when I came over to his house. I assumed he was unemployed, but then my friend explained that he was a financial planner, just when that line of work was beginning to make inroads to the career mainstream and that he worked from an office in their house.

His office was rather austere, a single telephone, rows of financial and accounting-related books on the shelf, an adding machine, certificates on the wall and an overflowing rolodex – remember those?

Desktop computers were still roughly a decade away from becoming an office staple.

As someone with two working parents – one based in an office and the other in a hospital lab, I found it hard to wrap my head around the idea of a home-based office. I wasn’t so sure I wanted to see my parents both in the morning and the minute I returned from school.

But that was then, and this is now.

I won’t go out on a limb and say that working “remotely” as opposed to the old vernacular of “working from home” has become the rule rather than the exception, but in a recent survey of some 200 CPA firms almost half (43 percent) had staff who worked exclusively from home. While more than 40 percent of those polled said that remote workers allowed them to hire outside their established geographic markets.  And some 82 percent indicated that they retained the remote worker even when said worker moved away.

Where does it all go?

Someone once asked legendary financier J.P. Morgan what kind of gas mileage he got on his newly purchased Rolls Royce.

Without blinking Morgan casually replied, “if you have to ask, you can’t afford the car.”

I can honestly disclose that the purchase of one of the world’s most luxurious automobiles was never a consideration in my household budget. So, asking about mileage on a car like that was sort of moot.

Not surprisingly, items such as mortgages, college tuition, food, clothing, power and telephone jumped to the front of the line at Chez Carlino in lieu of a $300,000 Rolls Royce Phantom or Silver Cloud.

But in a sort of related storyline I recently came across a survey that tracked household finances, with a spotlight on the average month expenses of what the poll termed “non-essential items,” as opposed to   monies dedicated toward savings and other critical financial targets like life insurance.

As it turns out, the average adult in the U.S. spends roughly $1,500 per month on these non-essentials, which, if my math is correct, extrapolates to about $18,000 per year.

Food and beverage costs top the list, specifically eating out, ordering take out, having drinks or buying lunch instead of brown bagging it. Others include “impulse purchases,” gym memberships (personally guilty), and even bottled water.

Two Blueprints for Succession Failure

When it comes to facing succession and ownership transition within CPA firms, experience has taught me there are two types of practitioners – those who are proactive to securing their next generation of leaders and those who continue to procrastinate despite repeated efforts to convince them otherwise.

Cases in point.

Late last week I was speaking to an owner in his mid-60s who runs a CPA practice in the Northeast. He has no succession plan, nor has he taken anything but cursory steps to rectify his situation. I had him meet with several firms and not surprisingly he found something he didn’t like in each – mind you nothing that could not have been easily overcome.

In fact, in one of his meetings, he deliberately put his feet on the desk of the managing partner and told him he didn’t want to go from owning a firm to becoming an employee.

That would be the Webster’s official definition of making a wrong impression. Trust me, I heard about it chapter and verse afterward from the buyer firm. I said when something like that happens, it’s obvious he wasn’t the least bit interested from day one.

Not to be outdone, earlier I had visited a long-time client, who, as he approaches 70, continues to log ridiculous hours when at that period in his life he should be more concerned about lowering his handicap.