Nick Hodges CPA/PFS, MBA, CFP, CGMA

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1 Nick Hodges CPA/PFS, MBA, CFP, CGMA August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 1 Tax Advice Disclosure Here s the fine print: To ensure compliance with Internal Revenue Circular 230, we inform you that any U.S. Federal tax advice contained in this communication is not intended to be used or written for use, and cannot be used for the purposes of (a) avoiding penalties under the Internal Revenue Code or (b) promoting, marketing, or recommending to another party any tax related matter(s) addressed herein. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 2 1

Federal tax advice contained in this communication is not intended to be used or written for use, and cannot be used for the purposes of (a)

2 Dedicated to YOUR Experience This session compiles and demonstrates proven tax season best practices, showing you how to break out of legacy thinking so you can take better care of your clients and set the scene for increased profitability. AUG 8 Introduction (1 Minute) Practical information (68 Minutes) Closing (1 Minute) August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 3 OUR MAIN OFFICE LOCATION: NCH Tax & Wealth Advisors 1661 E. Chapman Ave. #2A Fullerton, CA (714) info@nchwealth.com August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 4 2

AUG 8 Introduction (1 Minute) Practical information (68 Minutes) Closing (1 Minute) August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 3 OUR MAIN

3 NCH TAX & WEALTH ADVISORS SPECIALTIES U.S. Tax (Americans Stateside and Abroad) Financial Advice Bookkeeping & Business Consulting Outsourcing Expat Tax & Wealth Management Family Office Services August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 5 OUR TEAM 5 CPA Wealth Advisors 6 CPAs 18 Employees August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 6 3

Business Consulting Outsourcing Expat Tax & Wealth Management Family Office Services

4 MY CREDENTIALS Over 30 Years Experience CPA 1981 MBA 1984 CFP 1997 PFS 1998 Author: Expat Taxes Made Easy International Speaker August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 7 Why did the railroads not get into the business of airplanes or trucks? HINT: They were in the railroad business instead of the transportation business. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 8 4

railroads not get into the business of airplanes or trucks?

5 What business are we in? August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 9 We are in the business of managing relationships and helping our clients make smart decisions with their money. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 10 5

6 Life is like an ever changing river: You cannot step twice into the same river. Success Requires We understand the context We identify the trends Heraclitus August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 11 Discussion The success of my 35 year career. Why was I so successful? And why you are destined to lead a much poorer life if you try to follow in my footsteps. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 12 6

CPA/PFS, MBA, CFP, CGMA 11 Discussion The success of my 35 year career. Why was I so successful?

7 The Past 35 Years August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 13 Tax Returns and Bookkeeping How we prepared tax returns in the OLD days How we did bookkeeping when I first started August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 14 7

tax returns in the OLD days How we did bookkeeping when I

8 Historical Model for Accounting Firms 1/3: Paid to Worker 1/3: Paid for Overhead 1/3: Paid to Partners Profit Workers Overhead Partners August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 15 Hourly Rates Calculations Billing Rate Calculation for Worker to Earn $50,000/Year Divide $50k by Annual Hours 2,080 Hours $24.00/Hour Multiply Hourly Rate by 3.5 or 4 Firm Billing Rate for Worker $72 $96/hour August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 16 8

Rate Calculation for Worker to Earn $50,000/Year Divide $50k by Annual Hours 2,080 Hours $24.

9 Comparison of Pricing Against Inflation Years 2.85% Annual Inflation ( ) Average Tax Return Average Bookkeeping Investment Fees 1987 $500 $750 3% 8% 2013 Adjusted for Inflation What are YOUR average fees? $1,038 $1,558?????? 1% 5% August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 17 These old pricing models may not be dead, but they are dying quickly. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 18 9

3% 8% 2013 Adjusted for Inflation What are YOUR average fees? $1,038 $1,558?

10 Technology and Efficiency In the falling market Technology increased efficiency Efficiency protected profitability We have maximized profitability. There is not enough room left in efficiency to provide profit in a falling market. Future success depends on delivering VALUE. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 19 What do we need more than anything else to grow? More Money More Team Members New Clients But Greater Intellectual Capital Firm Wide August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 20 10

Future success depends on delivering VALUE.

11 What is Intellectual Capital? August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 21 Intellectual Capital The knowledge to produce exceptional value for your clients August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 22 11

12 What business SHOULD we be in? Creating wealth for our business clients Improving the financial lives of our individual clients August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 23 How should we charge or be paid? It depends. It should be based on the value the CLIENT thinks we have provided them. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 24 12

individual clients August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 23 How should we

13 The tax professional business has many profitable opportunities, but NONE with better margins than Financial Planning. August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 25 Most Tax Professionals Have Too Many Clients August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 26 13

August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 25 Most Tax

14 Client Class # Of Clients Know Your Client ABCs Annual Revenue 2005 Metrics Total Annual Revenue % of Total Revenue A 5 Over $20,000 $ 166, % B 6 Over $10,000 $ 75, % C 10 Over $5,000 $ 72, % D 23 Over $2,500 $ 79, % E 37 Over $1,000 $ 59, % F 77 Over $500 $ 51, % G 264 Below $500 $ 63, % 422 Total Revenue = $ 567,033 August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 27 What does this mean? Know Your Tax Practice Dropping 62.6% of tax clients Equals loss of only 11.1% of annual revenues Reduces tax season 4.4 weeks Would you like to go home early? August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 28 14

1% G 264 Below $500 $ 63,022 11.1% 422 Total Revenue = $ 567,033 August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 27 What does this mean?

15 Nick has to decide which clients to keep. 158 A F Clients = 88.9% of Revenues $504, Weeks of Tax Season! 21 ABC Clients = 54% of Revenues $314, DAYS of Tax Season! Would you like to go home early? August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 29 Guess what? Your best Tax and Business clients and Your best Financial Planning clients ARE NOT THE SAME PEOPLE! August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 30 15

Would you like to go home early? August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 29 Guess what?

16 Set Up Tax Season for Success Tax Season MUST DOs to Increase Efficiency August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 31 Pre Season Preparation Pre Schedule All Appointments Base appointments on last year s actual appointment schedule Early or late in season Day of week Time of day August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 32 16

Appointments Base appointments on last year s actual appointment schedule Early or

17 Pre Season Preparation Set Up Your Total Tax Season Set a daily last appointment time and KEEP IT. Leave openings for lunch Schedule time off August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 33 Tax Appointments Conduct a 60 Minute Tax Appointment Review completed organizer with client Enter tax return data in less than 10 minutes Next 50 minutes listen to clients talk About their plans About their problems August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 34 17

Conduct a 60 Minute Tax Appointment Review completed organizer with client Enter tax return data in less than 10

18 Tax Appointments What about their problems? Their problems are your big money opportunities Discuss meeting again in off season REMEMBER to follow up: Remember the problem Prepare the solution Contact the client August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 35 Handling Mail In Clients Tax Preparation When to complete them When an appointment doesn t show up 4 5 mail ins in an hour The NUMBER ONE thing to do for a mail in client (Hint hint) Pick up the phone! August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 36 18

Prepare the solution Contact the client August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 35 Handling Mail In Clients Tax

19 THANK YOU! If you have questions regarding this presentation or want to know more about adding financial services to your tax practice, please contact: James Moss RFC, CEP Nick Hodges Michael Roby NCH Tax & Wealth Advisors Money Concepts (714) (317) August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 37 19

adding financial services to your tax practice, please contact: James Moss RFC,

Nick Hodges CPA/PFS, MBA, CFP, CGMA

Nick Hodges CPA/PFS, MBA, CFP, CGMA August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 1 Tax Advice Disclosure Here s the fine print: To ensure compliance with Internal Revenue Circular 230, we inform you