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Setting Boundaries and Managing Scope in Advisory Work

Published by Summit Marketing Team on Jun 10, 2024 9:52:27 AM


The Modern CPA Success Show: Episode 121

Adam and Tom welcome to the show Chris Papin, Founder and Owner of Papin CPA. Chris discusses his multifaceted role as a lawyer, CPA, and insurance producer. They discuss the importance of scoping, setting boundaries, and guiding clients through next steps. The episode covers the challenges of defining boundaries in advisory services, managing client expectations, and handling scope creep. Chris emphasizes the need for clear communication, strategic decision-making, and adaptability to clients' changing needs. The conversation concludes with the nuances of client relationships, the importance of onboarding, and the impact of economic changes on client services.



Intro (00:00:00) - Welcome to the modern CPA Success Show, the podcast dedicated to helping accounting firms stay ahead of the curve. Our mission is to provide you with the latest and greatest insights on cutting edge tools, innovative marketing strategies, virtual CFO services, and alternative billing methods. Join us as we change the way people think about accounting.

Tom (00:00:23) - Adam, our listeners are going to hear from Chris Papin today. He's got three different pillars he's going to talk to us about right scope, boundaries and next steps. Kind of. What were your thoughts about what they're about to hear? 

Adam (00:00:36) - Oh, no, I think it's a great perspective. I mean, Chris just in his firm size, you know, he represents a lot of clients that are like about a half 1 million to $2 million in revenue. And I know that we've kind of moved out of that space a little bit. So whenever you hear us talk, a lot of times we're talking about these bigger scoped engagements. And, you know, it's more all you can eat kind of a service.

Adam (00:00:56) - So I think it's really cool to listen to him and, and kind of have him walk us through how he scopes, how he sets boundaries and has those next step conversations with his clients. 

Tom (00:01:05) - Yeah, I think it's really valuable. Even if someone listens early on and says, this isn't necessarily the kind of service I provide some of the approaches he has, I would just say, wow, this could apply to a lot of conversations to have a much better, more beneficial kind of advisory relationship with your clients. 

Adam (00:01:21) - Yeah. Let's jump in and talk to Chris. 

Tom (00:01:23) - Sounds great. All right. Welcome to our listeners, another episode of our modern CPA success show. I'm Tom Wadelton, one of the co-hosts, joined by my other co-host, Adam Hale. Adam, welcome. 

Adam (00:01:34) - Hey, Tom. 

Tom (00:01:35) - Hey. And we're excited. Chris Papin is with us today. And Chris is the founder of PAP and CPA and also PLLC, Chris, welcome to you. I, I will say, as I read lawyer and CPA and insurance producer, it sounds a little bit like the beginning of a joke that these guys walk into a room, but we've got that all wrapped up in Just You, which I'm excited talking about.

Tom (00:01:55) - Can you tell us just a little bit more the story of kind of what led you to those three at the same time, and kind of how you've gotten to where you are with us today?

Chris (00:02:02) - Yeah. You bet. Thanks for having me., so kind of the cliff notes version of this is I was always interested in small business. My family, mom and dad, both small business owners, both in education. And then fast forward as I'm going through my education. Literally sitting in an accounting class asking the professor, why do we keep skipping these sections? And the candid answer was, well, we can do it, but you can't draft. You're not an attorney. That's for the lawyers to do. And that was kind of the first realization of well this is stupid. Why are we all going to different offices. Fast forward. I'm sitting in, in an environment as I'm coming out of law school, and I'm watching a lot of small business owners and watching, you know, my, my fellow classmates from high school and college starting their businesses.

Chris (00:02:48) - And they're looking for that one stop shop. So, we represent small businesses, small business owners. I've kind of got my fingers in the things that they do to help. And then somewhere in between, maybe good or bad, we try to foreshadow because a lot of times you know what's about to happen next or, you know, the typical life cycle. So we try to help folks kind of be forward looking in the adventure. We call it advisory based services. There's lots of folks that do those things out there. But as a small business owner, they don't know what to ask for. So that's where we try to position ourselves over the years. Now, before you go too far, the punch line usually deals with a law firm named do We Cheat them and how?

Tom (00:03:32) - There you go. 

Chris (00:03:35) - Those are for the joke. You know it's out there, but we may as well go straight to it. Right.

Tom (00:03:38) - And the assurance came along the way of just recognizing the need that clients were having and saying, I could offer this as well.

Tom (00:03:45) - Is that fair?

Chris (00:03:47) - Absolutely.

Chris (00:03:48) - It was kind of the same, same drill. The actual story is we handed off, we did an estate plan that required some life insurance. We handed it off. When it came back, the life insurance was 100% different than what was required. Oh, so we stepped back and said, nope, we're not doing this anymore. I went and got licensed to be able to build that structure and have a little bit deeper relationship, because sometimes, you know, there's folks and differing complexities everywhere. Insurance agent didn't mean to be wrong. They just didn't know any better. So, it gave us the opportunity to partner with folks differently or simply do it ourselves.

Tom (00:04:24) - Okay. So, you've talked about. So, we talk about being the trusted advisor. Lots of accountants have that. And you're that in three different capacities of doing that. But you've talked about having three pillars around ethical trust advisor. You want to expand on that a little bit.

Chris (00:04:37) - Yeah. It's they're very linked.

Chris (00:04:42) - And sometimes folks ask me, you know, hey, you talk about scope, you talk about boundaries. What's the difference? And then naturally, the next steps, because it's about results. It's not about the plan. It's not about talking about it. Clients want results. So, I focus on those three. The big difference between scope and boundaries is scope is kind of the legal ease, the technical stuff, the boundaries is all that soft. How do you work with folks? How do you impact change? How do you communicate? And you should be able to communicate both in good and bad environments as you go through it. If you can't have the hard conversation with your trusted advisor, who do you have it with?

Adam (00:05:24) - Yeah, I think the big thing there, Chris, is like. And that's a good call out., I get the team gives me a hard time all the time because my, my service agreement, the engagement letter is intentionally a little vague. I get very particular whenever I'm talking about a task.

Adam (00:05:41) - Right. There's accounting and we'll say bookkeeping. I know that doesn't sit well with a lot of people, but the reality is, is, you know, we're doing a lot of the back office work for people., that does need to be very specified, you know, so you call out when you're going to do it, all the frequencies, all those kind of things. But whenever you get to the advisory side of the house, it is relatively,, you know, open season. And you have to be careful framing things in too much, you know, because you don't want to, like, pigeonhole it in or you don't want to make guarantees like, oh, I'm going to raise your I'm going to increase your business by two x, I'm going to do this or I'm going to do that. And so people are always coming back and be like, hey, I read the service agreement. Like, what am I supposed to do? Like on the advisory side. So just kind of, you know, diving into that a little bit with you, like, how do you know, we I think the more important part is the boundaries, like you're saying, but from a scope perspective,, what's your philosophy on how detailed you get? Or, you know, do you leave a little bit of imagination, get a little bit more generalizations in there for some of your stuff?

Chris (00:06:45) - We take a very similar approach to what you described when it's task driven or backwards looking kind of maintenance stuff.

Chris (00:06:53) - It's pretty easy to say what happened. Okay, here's what we go to when it's forward looking. The way I describe it to clients is part of my job is to keep you off the bumpy roads. Sometimes you need to exit and you've got to go around the traffic jam or the wreck or whatever's going on. And if I can tell you, hey, there's 2 or 3 exits upcoming, you might want to consider one. That's the best analogy that that hits with folks. It's not my job to make the decision. I'm not the business owner, and in some instances I'm prohibited from making a decision with professional ethics boundaries. But sitting at that board of directors table with folks and showing them their options is where we need to be. So that resonates. Where the disconnect comes is

Adam (00:07:41) how do you put

Adam (00:07:43) - That in your engagement letter? Do you put like, I'm going to help you stay off bumpy roads? Like, do you, do you, do you put that in your engagement letter.

Adam (00:07:49) - Because we kind of we're a little bit more aspirational whenever it comes to the advisory piece. We talk about some things like what our goals are and targets are, but we stay, you know, we try to stay pretty high level in that section of the SSW. But, 

Chris (00:08:06) - our style with it is we try to build space for known time, if you will. That is undetermined for tasks that we know we're going to end up doing. We just don't know what the tasks specifically are so that when we're on the exit and it requires more personnel time, you've got slack inside of your agreement to figure out whatever that may be. We all know as advisors that's going to happen. If you're in that space, a lot of clients will push back with, well, I'll just buy the time as I need it. Cool. Fine. What if I don't have the time? Most firms are pressed for time and personnel right now, so you've got to rebuild that slack. And that's a dialogue that you kind of have to have with folks.

Chris (00:08:52) - Then, of course, you know, my bad analogies always ring true. But if I said to you guys, let's all meet at a point and I went north and you went south, we would all meet at that point, one of us would take a really long time to get there. So inside of that we need the space. So we're all going north. We don't have to be on the same highway, but we all need to go north because we'll get to that point roughly about the same time. Said differently, if you give me open ended tasks and just say, go complete these on my behalf. Sure, I can run the clock, but then you're going to have a conversation with me about how you're upset about the billable hour, or how you're upset about how much you're paying our firm for maybe what you don't perceive as the client as a valuable delivery. I could have done that on my own for a lot less cost. You ever hear that?

Chris (00:09:46) - So we want again go back to let's build enough slack to sit at the table and make strategic decisions while we're making decisions.

Chris (00:09:55) - Change orders will be required. That's where we can get into the substance of who's doing what task. What do we think the budgets will be. Sometimes you don't know the budget. It's rough. But then you can kind of have a flex conversation of, does this make sense? If it's $100,000 spend for a $10,000 benefit, that's going to strike some as a smoking deal and others is, you're nuts. That's the conversation that we need to invest in and have with folks. And oftentimes business owners won't create the time to reason through it. It's overwhelming. It's too much, but they have to. That's how they're.

Adam (00:10:34) - Are you billing hourly.

Chris (00:10:35) - I'm sorry.

Adam (00:10:36) - Are you billing hourly or do you have subscription based model with change? Generally it's a subscription based model.

Chris (00:10:43) - Most folks are kind of on a on a monthly billing cadence, time complexity and, our expertise, if you will, if I can call it that or always factors in there. So, time's an element. But, you know, if somebody is brand new looking from the outside in and saying, how do I build this, this board of directors' advisory model, one of the easy things to do is say, how much time are you going to spend with the client? Figure out your prep time.

Chris (00:11:10) - Figure out your conclusion time. Base it off that. That's a good place to start.

Tom (00:11:16) - And when you describe scope, would that be part of your scope document of, you know, work expecting this will be, you know, six hours a month or something is what you would say. This is our board advisory.

Chris (00:11:27) - Generally we do.

Chris (00:11:29) - Yeah. It may not be ours. We usually I kind of frame them in meetings. Sometimes meetings take 30 minutes. Sometimes they take 90 minutes. Topics depend in there. But we will typically go in in the in the case of you know we work in the in the billable our environment but we target ours first recognizing that if one month took too long and another month took too short, we're probably square. It's good enough. We don't need to micromanage all of those little things in between.

Adam (00:11:59) - Yeah, that makes sense. So to find for me as we move from scope, I think that makes sense. What I think we've agreed upon is that, you know, tasks, accounting tasks defined get a little looser with, you know, kind of the fundamentals of what advisory means.

Adam (00:12:15) - But what is like being a strategic advisor, like as we move into the boundaries. Because now that you haven't clearly said, well, I'm going to do X for you other than show up for a meeting, right., so we've defined that, that we're going to meet because that's the way ours works. Small, medium or large. It's based on, you know, how much how many meetings we're going to have with you because we take a very proactive approach. We're pushing that with the clients. We're not saying, hey, call me when you have a question. We're saying, you know, because that's the difference between just being like a tax person or, you know, an accounting person and being an actual advisor. We're supposed to have an opinion. So, we want to meet with them and we're forced, you know what I mean? Like that's a lot of times. So for you,, whenever you say, like if you were hiring a new CFO on your team or whatever you call that that role and you're saying, hey, be this person.

Adam (00:13:03) - Now that they've looked at that. So, and they're like, cool, I'm going to help them stay off bumpy roads, per the agreement. What is that exactly mean, Chris? Like what is being a good strategic advisor mean to you in terms of those boundaries?

Chris (00:13:18) - So, so on the boundary side, this is that soft conversation. And in, body language meeting people where they are using client friendly vocab., you know, I tease people all the time. Have you ever had a client walk in and just nail your vocab? Is the  actual technical work that they need? No. They say something like the last firm. I don't think they did a bad job, but all they did is file my return. We're really looking for something more. Well, what? What are you looking for? I'm not real sure. I just feel like others have more of a relationship. That's client speak. And that's where we really try to spend the time meeting folks where they are. Sometimes they're good conversations, sometimes they're hard.

Chris (00:14:06) - There's no magic bullet. But if you can look through a lens and, you know, again, bad analogies apply here. So, during a football play, Travis Kelce is supposed to run a very specific route in the Super Bowl. He reads the defense and adapts. We should be doing the same. That Mahomes will see the adjustment and throw the ball in a different place based on that adjustment. If I don't know what play we're running, how am I supposed to do that for you? So that's kind of where this boundary stuff comes from. Of just because the engagement says we're going to meet quarterly doesn't necessarily mean that's the only touch we should have. I should be getting email updates. Maybe there's quick, you know, just 5 or 10 minute phone calls along the way., maybe we just had a quarterly meeting, but something materially changed and we need to have another one two weeks later. How do you instill that ask into your clients, but also not have it where it's. On demand.

Chris (00:15:12) - I need it now. It's Sunday at 530, and you're with your family watching the Super Bowl. And I'm supposed to be responsive to the client at the same time. You've got to strike the balance between some foresight, some planning, some intentionality and responsiveness. And I think this dialogue, once you have it with the client, they're going, okay, I kind of understand what's going on. It's not your emergency that I'm at the dealership on New Year's Day or New Year, New Year's Eve, trying to buy a car. I should have told you about that a long time ago. And when you say those things, clients perk right up and say, oh, yeah, that makes sense. And then what do they do? They text you on New Year's Eve day despite it, and then you can kind of give them the reminder to help train them through over time.

Tom (00:16:00) - So you're getting. Sorry to interrupt you, but you're getting something I'm guessing you deal with that. We do also that especially on the boundary side, it's an ongoing conversation that we need to be having with clients in what we can often find

Tom (00:16:13) - So I can give you an example that we'll have clients where we will send out customer invoices for them. And there are times where when they start getting the boundaries of wanting us to really read and understand their statement of work and know changes and things where we have to actually figure out the invoice amount that starts to sometimes get uncomfortable, where we would tend to say, hey, you can decide the amount, we're happy to send out the invoice. That often is a constant boundary conversation to help them understand why that should be the case, because there are sometimes where that can be really simple and it's a very reasonable thing to do. There can be other times where it's both difficult and we don't have the information, so the chance that we're going to do it wrong is a lot higher. But I guess I'm curious for you. Do you find it's a constant boundary conversation with people as opposed to, hey, I get it set up upfront and then it really runs and no one ever ventures outside the boundary 

Chris (00:17:01) - 100%.

Chris (00:17:02) - And I don't want to overdramatize anything, but most business owners know they don't understand it. So there's a layer of I'm not even going to invest the time because I'm an expert somewhere else. Or perhaps you have some of the smartest people in the room that do have this skill set. You know, architects and engineers, doctors, lawyers. I like picking on lawyers because I am one. But every lawyer I know will say I can learn that I'm I cool, go learn it. The problem is, is you don't have the history in the experience of debits and credits and all of the different industries.. So when you look in the theory it's either a debit or credit. In the application. How am I supposed to figure that out from the handwritten receipt that you scanned that I can't half read that. We've asked about six times that went to your spam folder, and you're pissed off because something else happened that day that triggered that reminder. You know, that's life. So let me say it a little bit cleaner.

Chris (00:18:07) - There's always somebody with an opinion about how they did their tax return or how they interpreted what their financial professional did for them. So you're getting layman advice on super technical issues that is validated by YouTube and TikTok? Yes. So, you constantly have to kind of go backwards of do you want all of the technical detail, or do you trust me and my team to execute on the technical detail? If you'll give me the nuggets that I need? Some people want one, some people want the other. Some people say they want one and actually wants the other. Again, we're in that soft soup of how do I navigate this with people? I have found you just have to slow people down and lean into whatever it is that's right there. Yeah, it sucks sometimes because it's the 15th time you said the same thing, but through storytelling, through analogy, through intentionality, sometimes you can get folks to say, oh, wait, I remember you told me that. Oh yeah, that that's why you can't tell me how much it is, because it depends on how much I use it for my business.

Chris (00:19:13) - I remember you telling me, now, how do I calculate that again? Home run. We've made some runway. Yeah. Is that a 10 minute or 2 hour conversation? I don't know, but it's. I am a soccer coach, too. I coach middle school kids. You know, sometimes I've got to tell him repetitively that, coach, can I go into the game? Can I go into the game? You're going in for so-and-so at this position. You walk away, hey, who am I going in for? That's your client in a nutshell. Keep the info on repeat. Give them the resources so they can see it, because that makes them a well-informed consumer with you.

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Adam (00:20:32) - Yeah, I think on the advisory side, sometimes whatever the boundaries, I mean, that kind of stuff, you know, I think we've gotten pretty good. I mean, don't get me wrong, people still kind of cross the lines, but I still feel like with that tactical stuff, it's a little bit easier to define the process and say, well, you're out of bounds. But whenever it comes to advisory work, this is the slippery slope, right? So again, rather than just being open season on us, call us every time you have a thought. Don't get me wrong, we invite that kind of, behavior because we do want to be, you know, we are we do want to be the first call, right? Like, pick up the bat phone.

Adam (00:21:05) - Call us. It's always open. Right? But we try to avoid the scope creep by creating these intentional meetings where they know they're going to have these touch points, and we can have these conversations. But sometimes, especially now, I'd be curious to see because the, you know, the environment's changed quite a bit, like just the economic environment we went from, like all this uncertainty with Covid. I know we were kind of talking earlier, like all this uncertainty around Covid and all these things that that happened with the, you know, just where we are for the last like 2 or 3 years in our journey. And I think that, now clients need us more than ever. And so how do you kind of work through some of that scope creep that maybe comes out of some of those meetings like, hey, I need you to actually do this for me or do that for me.

Chris (00:21:48) - There's two things that jump to mind when you when you ask this question. The first is what I like to call talking about talking about it.

Chris (00:21:56) - We're looking more to do, not to talk. There's talking that goes into planning and doing. Do not hear that wrong. But if you're the personality that says, one day we should sit down and have a conversation about how I'm going to retire. I'll put that in my notes. I'm going to put it at the bottom of the top ten list, and you let me know when that day is and we're moving on. Because that's an undeveloped thought. We can't take action on it if you're not right to take action on it. So that talking about talking about it concept, it's hard to avoid because everybody has hopes and dreams. But we've also got to get rubber to meet the road. I can spend thousands of dollars talking to people. They're going to be pissed because there's no value in it for them. If all we do is talk about it, we've got to take action. I think the second side of that revolves around., you know, an easy way for me to say this is the tax authorities kind of waived deadlines for a while.

Chris (00:22:58) - There's all the money in the world. There's bailouts, there's resources. It created bad behaviors. Now you got 30 days to respond. And guess what happens on day 31? They send you a collection notice. That's the reality of what it was. And I and I think folks got into this false sense of confidence. If I just blow it off, they'll give us some flexibility around it. And there is no magic bullet if you missed the statutory deadline, penalty and interest applies. And that's where I think folks need to get drug to the table in some instances to recognize. Their cadence, their work ability, their space to do things may not be going on spring break vacation because you have to sign and review a return during that same window. I'm sorry, I know that's frustrating, but welcome to the life of small business. If you don't like that, file the extension and deal with the consequences that come with extensions and potentially estimates and extra work that goes in. But those are your choices.

Chris (00:24:06) - Which of the roads do you want to be on? Business owner and I.

Adam (00:24:10) - Want to hang on to that. Yeah, I want to hang on to what you said there, like in terms of the bad behaviors, because I think that, you know, what I've seen is and I think, you know, I'm not going to give the exact numbers or whatever, but I thought at one point we were even as a society at like our all time low for credit card debt, like going into the pandemic. And then everybody had all this angst and there was all this money that got pushed in. Of course, we know inflation ran counter to that., but everybody had money. So, when businesses are doing well and they're cash heavy, everybody's happy. Like, your job as an advisor is a lot easier now. I will say that, you know, you still need to make sure, you know, maybe you could argue that it's harder to show value, in those instances, whenever a client's got a great bottom line or they're flush with cash.

Adam (00:25:00) - But you have to just be in a position always to, I think, have hard conversations, with our clients. And what I always hear from, you know, from some of these things, like whenever we're talking about, I think before we get into even boundaries, it's like, how do we make sure that we're setting the tone on, on the value that we bring within the meeting that we are doing?, rather than just all the ancillary things that we're doing around it. And what I constantly hear back from clients is, number one, I need to know that you're thinking about me, right? So don't let the first time you've seen my financials be the second we see it together. You know what I mean? So please spend some prep time before the call and make sure if there's anything that's messed up. If you want me to trust anything you have to say, it better be clean before you get into the call. And please make sure you understand the story and don't read along as we're going, because you might be surprised by the ending.

Adam(00:25:54) - Yeah. So that's like one thing that I think you need to do in order to have that value. I think that you do have to have an opinion. And I think that's weird. For this space, we're used to ask being asked questions and then us being able to give them a very like technical answer or point to something. But I think that we have to have opinions. I think we have to say, well, you know, if I were you, this is kind of what I'm thinking, you know, those kind of things., and I and I think we have to have hard conversations around asking tough questions, like you said early on. Like, right. Whenever we started, clients don't know what they're even asking for, and they expect us to think on their behalf, which is, again, a totally different engagement than what we've ever done as a profession. So, you have to be able to go in there and go, Chris, buddy, why the hell would you do this? Like, you just told me that you were doing this and you were doing this and you're doing that.

Adam (00:26:44) - But this doesn't make sense. Like, why would you continue to do that? Those are the type of questions. Those are the type of relationships that I think create the value inside of that meeting. You know, if you've prepped in time, you can tell the story and then you can ask hard questions and have tough conversations with people. I think they'll see the value. The only problem is, is now the economy is kind of like, you know, in question and people are, you know, let's be honest, people are a little more grumpy now than they were, you know, because cash is down, debt's up. Profitability is kind of shaky. Even if they're doing okay and a lot of different industries, it's really quick to point fingers at people or you find yourself spinning out and doing extra work, you know, in order to help people go through, you know, reduction force. So if they've got a riff going on, you got to do some planning. Do you do how do you manage that scope in that time? You know, assuming that we've got all the standardized stuff down, do you do change orders and those kind of things, or how do you create boundaries around that for the client that you can help them but not kill yourself?

Chris (00:27:49) - The change order is key.

Chris (00:27:51) - And, you know, you raise a really good point about knowing kind of the client story, the client path, everything you said clients got to do, too. But one of the things I use is an analogy here, which creates some of the hard conversation. And it is hard because a client wants a vehicle. Tax deduction. Right? But they also want to build wealth.

Adam (00:28:19) -okay.

Chris (00:28:21) - The one asset that folks buy in their life that depreciates in value is a vehicle. But you sometimes end up in fisticuffs just talking about how to depreciate a non-business vehicle. You know, clients go, well, my buddy did it and all this other stuff, which leads to where what I think you're getting at. Do you want me to do the financial analysis to tell you if this is a good or bad decision? Do you want me to just say, here are the structures to justify? Or do you want me to be your advisor and shake you a little bit and say buying a $100,000 car does not make sense right now, especially with vehicle interest loans the way they are.

Chris (00:29:02) - I have a reasonable vehicle with cash and avoid the debt. Which of those three advisers does the client want? And you raise another great point in the economy has changed. In the past, you couldn't fail. There's a generation of business owners who literally do not know how to fail because it was always great. What are the hard decisions you want to do? And I have found when those change order inflection points come, or when you need to have the hard conversations, sometimes I just have to slow down and say, hang on. Remind me of what you think my role is. 85% of the clients get it right. Sometimes you get to redirect folks, but 85% get it right. Then you kind of say, okay, if that's my role, you want me to tell you the bad news here, don't you? Well, yeah, I mean, I do want that car, but not if it's going to sacrifice my retirement. Perfect. Now we got something to talk about. Let's put that in numbers.

Chris (00:30:03) - Let me get that in a graph or colors or whatever it is that resonates with the business owner. But sometimes you got to pull that out, which is surgical, strategic, hard. Nobody wants to have the conversation. Most just want the yes, go do that, justify that decision. But we can't always.

Tom (00:30:22) - Yeah.

Tom (00:30:23) - I like the technique you're using, Chris. I've asking the questions and confirming with the owner versus jumping right in and telling them, you know, that was a bad idea., if we're doing that and confirming with them because they'll likely walk themselves down the path to the answer, probably quicker than you saying what you should have done or what you should do is X, Y, and Z.

Chris (00:30:44) - I'm speaking way over broad here, but I think most know the answer before they call you. They're looking for an avenue to justify what they think might be a bad decision, because I can save 30% in taxes. It's okay to spend more money. That's never the case.

Tom (00:31:01) - I'm going to.

Chris (00:31:02) - Work if you don't need when it's on sale.

Adam (00:31:04) - I'm gonna have to work on that. Tom. You know, I usually go in and go, what the hell is that for? What'd you do that for? Are you crazy? Surely so, yeah. Maybe I need to tune in my advisory techniques. Be a little more diplomatic. 

Tom (00:31:18) - I was going to compliment you, Adam, because in your coaching. So, Chris, Adam coaches all of our CFOs, he's done it and does it really well. What he often will tell us is the client usually knows the answer, that you don't have to be the expert. You can ask some really good questions and get in there. But oftentimes they know what the right thing is to do. And sometimes asking the one or a couple of questions. And Adam at the beginning like, hey, you told me this, so this doesn't make sense. You can just point out some of the logic that they're using, and often they'll catch themselves and maybe say, yeah, you're right.

Tom (00:31:46) - You know, maybe this car, it just looked really cool. But I did say I wanted to do x, Y, and Z.

Chris (00:31:52) - So in that I let's point out there's brainstorming, there's an organizing of thoughts. There's a there is no deliverable to that, that value for our more sophisticated business owners. So, when we talked about that board of directors meeting, the reasoning through sometimes you need to lean right in there and say, hey, I helped you form a conclusion. That's why I'm here. That's why we make the phone call. That's where these soft touches are. That's where that slack is in this engagement. Because dollars and cents value is different than peace of mind value and peace of mind. People know it. They'll talk about it to somebody else. But you don't always know it in the moment. And I think it's incumbent upon our profession to make sure we're sharing those things and asking the question, did I help you here? Because if you didn't okay, let's re scope.

Chris (00:32:40) - Let's figure out or maybe I need to go redo some work. If I miss the mark, it's okay. I'm not perfect. But I get it now.

Adam (00:32:47) - So is that next steps. You know that third pillar that you're talking about? You know, we talked about making sure that you kind of define it loose. Make sure we're adding value obviously to connect those two since we're not doing technical things, you know, the value and the boundaries that kind of exist around some of those meetings. But then what how do you deal with like next steps there?

Chris (00:33:06) - So I try to boil it down to real simple stuff. And what is client expectation. And like what is firm expectation. So if client is buying a new car just to kind of stick with the bad example, but if the client's expectation is that they're going to save $30,000 on their taxes and the firm realizes they don't have $30,000 in taxes to pay, there's a mismatch, and you've got to align that stuff super early in the process. And you're not going to be perfect, but you've got a perspective.

Chris (00:33:37) - you know, another popular one which promotes bad behavior that we were talking about earlier is I need my credit card points. I'm going to put it on my credit card to get the points. Well, there's a super slippery slope there of I don't have to pay the credit card in full. Now you're paying 25% interest on something that you didn't need anyway. Those are real easy. Like you're setting yourself into a system of potential traps. Most clients that I talk to, especially the business owners, want to simplify, but yet we gotta put it on the credit card for points like how does that simplify? Just pay for it directly and move on. So, getting those competing interests illustrated and then pulled back together to make sure that expectation aligns. That's probably step one in figuring out the next steps. If people see value in what's going on and there's and there's depth to it. If it's in financial world, we take it on through a change order.

Adam (00:34:40) - How's that conversation go? Because I think that's whenever you talk about boundaries.

Adam (00:34:44) - I think that's, you know, back to my question about a riff, you know, so if there's a reduction in force, you're like, hey, it looks like you're ten people heavy, you know, and they look at you and they go, but I don't know what that means. I can't get rid of these ten people. It's like, okay, I'll show you how to build a smaller house. It's kind of the way we refer to it a lot of times, like, let's build a smaller forecast, do all that kind of stuff at that point. Is that where you're saying, are you giving them suggestions or do you do it? Or do you stop and say, hey, you should do this, or for X amount of price, I'll do it. I mean, how are you usually handling those conversations?

Chris (00:35:18) - Are you we break it into kind of two different meetings. At the end of the day, the first meeting is to introduce the idea, figure out who's on first, what people might want.

Chris (00:35:27) - If the client says, I'd like to know how much it would cost for you to implement the reduction in force. Okay, give me some time. We put it in writing, get together a proposal. It doesn't have to be a super deep engagement letter. Just one, maybe two pages to kind of outline the highlights and then sit back down. Here's what it looks like. If you do it, here's what it looks like. If we do it, here's what it looks like. If there's no action. I would recommend. You do this one because you're about to spend $10,000. You don't have to and that you may not have. Or we recommend you do this one because by the time you spend 100 hours doing this, it's well worth a $10,000 investment. You know, just real quick, connect the dots so you'll get some folks that kind of try to fish stuff out of you. But usually when you get to the point where the rubber meets the road, there's a decision I have found that most.

Chris (00:36:20) - Yeah, that makes sense. You guys go or no, that doesn't make sense. We'll deal with it. Or no, we're putting it on the shelf. Those are kind of your three major decisions. Every now and then it's all I'll get back to you. And by when you've got to create all those normal follow-up boundaries that are appropriate in our profession. But I am of the style of give the options. I'm also of the style. There are certain things I'm just going to flat tell a client, no, you can't do that. No, you shouldn't fire your payroll company and run your own payroll. It's just a matter of time before you screw it up. And that's the one that's going to cost you all kinds of money. And you didn't even know it. And penalty and interest, if you're doing that, I resign. It's that important. Well, that conveys the message to them. Oh, the few hundred dollars I'm spending on a service I misunderstood. I didn't know it was that big of a deal.

Chris (00:37:12) - Had no idea. Thank you for referring me. That that's typically the conversation we run into.

Adam (00:37:18) - Okay, so to be clear, like in terms of your involvement included in your subscription as those quarterly, you're generally meeting with your clients on a quarterly basis, then having really high-level conversations that probably you're giving out great advice during that. But then if there's a call to action after that, there's typically a change order, and then you charge separately for that. It's not it's never it's pretty known that that's not really included outside of that conversation.

Chris (00:37:44) - You're spot on. The way we describe it is the idea or kind of the thought is free. The execution on the idea. You got to figure out who's doing it. Somebody's going to do it. If it's us, Bill, for it, if it's someone else, they're going to bill for it. If it's you, you figure out how you want to monetize that internally. But that's a relatively easy idea. You know, we get to deal about kids payroll all the time.

Chris (00:38:12) - I'm sure you guys running the same thing. It's a great strategy for business owners. At what cost? You know, if you're saving $500 a year and paying $500 a year in services, does it make sense? For some it does because they've got other strategies that they're going to implement on the back end. For others, it doesn't because all they wanted to do is pass it through as a payroll and buy groceries. So the idea in kind of that initial level of does this make sense for you? What are you thinking? That's free. Once we get into the execution and the helping of setting it up, moving the money, funding retirement accounts, or repaying life insurance policies or whatever it is that you choose to do all of that's what is the change order item.

Tom (00:38:55) - And Chris, to what extent is your team empowered to have those kind of conversations and come up with those versus them, usually escalating up to you and saying, hey, I think I've got something here. Can you run the change order process?

Chris (00:39:08) - That's a great question.

Chris (00:39:08) - It's tough because inside every firm you get different layers of understanding. We try to and especially with who we are. We work with a certain group of small businesses and small business owners. And internally I have what I call an it's like list. So, I can look at somebody and say, hey, it's like this other client over here. So the team is relatively empowered inside of that bubble because we have those packages. We do them for a living. We know what that is. It's when it doesn't fit that it's like, or there's that extra variable light over the top of, well, you know, they moved to Alaska and we don't have any clients in Alaska. So, how's this going to work? That's usually the stuff we kick back up and kind of reconvene among the administrative team, if you will, just to make sure we're not missing something or if we need to enable a strategic partner. You know, with the law firm, I'm landlocked by license. I can do a lot of stuff for an Oklahoma client and all over the place.

Chris (00:40:05) - But if you're a California client, I can't. So, there's things like that where we gotta call on strategic resources and making sure that the client understands what that path is important. So again, slow down, create some space, talk people through expectation as opposed to delivery. If everybody's on the same page, they love it. I run into that all the time just because it's like, oh, hey, moms, in whatever state, can't you do the estate plan for them real quick? And I'm like, I can do all the planning all day long. Can't do the drafting out of state. I've got to get co-counsel to help me. Oh, well, if that's the case, it's not that big of a deal. That's not a priority to us. We don't want to talk to somebody.

Tom (00:40:44) - Okay?

Chris (00:40:45) - Heard. We'll put it on the shelf. We'll deal with it when it's relevant. Subtle. But if I can do it all internally, it's different than having to go get somebody else.

Chris (00:40:53) - Same for you guys to write.

Tom (00:40:55) - Yeah.

Adam (00:40:56) - Yeah, absolutely. So just kind of, bringing it all together then, you know, for your clients again, it's just up front making sure you're really clear on the scope on the tactical stuff you're doing. You are getting paid to be clear on the ideation piece because you bake it into the advisory and you're typically delivering that on a quarterly basis. And then you're very clear about setting boundaries and next steps in terms of scoping things out, giving clients options. Is that a good, good kind of summary of your delivery model?

Chris (00:41:24) - It is the common question that we run into is, you know, as you're running a life cycle, fees change. As you know, things are coming. Fees change. Sometimes we don't enumerate it all to a client. They just know we're about to go do more. So it's like, hey, the engagement is going to expand because you've got two things coming. Here's the additional that goes with it. The great clients, the ones that fit my style.

Chris (00:41:47) - As you guys have figured out my personal personality along the way, I work for some, I don't. For others, those that I work for. There's that level of trust that says, yeah, we know when we get there, you got our back. So those ambiguous terms are less important or important in those trusted environments as they are in the brand new relationships. So brand new, you know it. Most folks think of it as groceries. And I'm borrowing this from a friend. But how much is a bag of groceries?

Adam (00:42:20) - Too much.

Adam (00:42:22) - I know it is right now.

Chris (00:42:23) - Yeah.

Adam (00:42:24) - Absolutely is it?

Adam (00:42:25) - Depends. On what? I know it's probably rhetorical, but it's just.

Chris (00:42:28) - Depends on what's in the bag. Right? Right. Right.

Chris (00:42:31) - You know, 100%. If it's all full of steak, it's a different price than if it's all full of ramen. So therein lies, like, what are you looking for as a client? What are you looking for as a firm? Are there matches like all of that advertising marketing match up stuff? It matters.

Chris (00:42:47) - It matters immensely. And Adam, yes, you've got to get all that stuff known up front. You got to spend time onboarding. And that's not billable. That's tough for firms. But that is probably more important for the value proposition, because if you're not speaking to your audience, it's never going to win.

Tom (00:43:09) - Good perspective.

Tom (00:43:10) - For sure. Great summary.

Tom (00:43:11) - The idea of just the three pillars and keeping those in mind for your clients, I think is really good. And being able to just reflect back and say, are there places where I feel like I'm out of bounds and need to have that conversation, and when do I get uncomfortable doing that? And I think there are times where we probably don't step back and think that way. We just keep rolling forward. And maybe subconsciously we're just sort of hoping the problem is going to solve itself, which it probably very rarely does that. Something like that sort of, hey, here's how you think of it.

Chris (00:43:37) - Tom, if.

Chris (00:43:37) - You have the magic formula for making that problem go away, sell it.

Tom (00:43:42) - Exactly.

Adam (00:43:42) - Yeah. Somehow that's all it is. All you got to do is talk to Tom.

Tom (00:43:46) - That's right. Somehow, sometimes.

Tom (00:43:49) - That can be a hard lesson to.

Tom (00:43:50) - Learn for that. Well, Chris, this is really helpful.

Tom (00:43:53) - I think your clients are lucky to have you. And I.

Tom (00:43:55) - Like the proactive.

Tom (00:43:56) - Approach.

Tom (00:43:57) - Of here's the.

Tom (00:43:58) - Conversation and let's talk about you've given us a couple different ways of thinking about how things work with clients, I think could make it very successful.

Chris (00:44:07) - I really appreciate you guys. Thanks for the opportunity.

Tom (00:44:09) - Thank you. Thanks, Chris.

Outro (00:44:10) - Enjoy this podcast. Visit our website summit CPA Dot net to get more tips and strategy for achieving modern CPA firm success. We are here to be a resource in this ever-changing industry.

Strategies for Setting Boundaries and Managing Scope in Advisory Work with Chris Papin