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Jennifer Wilson
Answering the 4 most common client transition questions

The time is now to address this key component of succession planning.

September 15, 2014
by Jennifer Wilson

Accounting firms across the country are preparing in earnest for the retirement of thousands of talented Baby Boomer CPAs. Many elements of succession need attention, but client transition is one area that seems to cause a lot of angst and generate a fair number of questions. Following are my answers to the four most common client transition questions asked of me as CPAs near retirement:

When should I start transitioning?

  • Start transitioning now! Great client service professionals, no matter their age, ensure that their clients have multiple contacts and relationships within the firm. This sets the client up for a smoother transition later. Start today: Ensure that at least one other team member has a relationship with each of your clients, is learning about their business and/or personal needs, and is available to answer their questions.

How should I approach transition?

  • Make a list of all client relationships and engagements you (the retiree) manage or participate in. Usually, the best way to do this is to download the names from your firm’s billing system into a client transition grid that includes fields such as the following:
    • Client name
    • Key client contact
    • Client contact information
    • Staff the billing system shows as working on the client’s account
    • Revenue collected from the client year to date and prior year to date
    • A priority ranking (A, B, C, or D) of the client
    • A “transition by” date.
  • Follow Pareto’s Rule. Sort the list in descending revenue order, with the largest clients appearing at the top. Pay attention to whether Pareto’s 80/20 rule applies. Does 80% of your client revenue come from 20% of the clients? If so, plan to spend 80% of your energy ensuring the successful transition of that top 20% of the clients.
  • Plan with each successor. Meet individually with your chosen successors to discuss the right communications and service strategy for each client they’ll be taking. Share your knowledge of each client and review the client files and billings with the appropriate successor. Encourage each successor to read about his or her clients online, via their websites, social media, and other sites. Ask for each successor’s input as to how he or she would like to see the transition go.
  • Take along a shadow. Whenever possible, bring your successor into meetings and telephone calls you have with his or her future clients. First, your successor will shadow you, listening, learning, and asking questions of you afterward. When he or she feels ready, encourage him or her to begin taking responsibility for the success of the client relationship. With each client, your successor should plan and manage the engagement scope, communicate with the client, enroll others to serve the client, and take point in client meetings. As your successor steps into the client ownership role, he or she should come to you with thoughts, ideas, and plans to get your feedback. As soon as you feel ready, “cut them loose” to manage things while keeping you in the loop.
  • Step back into the shadows. As your successor takes on client ownership, you must become the shadow, which is often the hardest part of the retirement process for great client service providers. When the client emails or calls you, you must forward the matter to the new client owner to handle, and then follow up with the client afterward to check in. If you’re in a meeting with the client and successor, defer all questions asked to the successor and refrain from taking the floor, dominating, or displaying your indispensable brilliance in front of the client. Instead, if you’re interested in a successful transition, hold your ideas and comments until the debrief afterward with your protégé, allowing him or her to circle back to the client with additional suggestions, ideas, or even corrections from the meeting, if necessary.

Whom should I transition to?

  • Identify a successor who is the best fit for each client. Don’t fall for the fallacy that one person will take all of your clients. That almost never happens. Instead, plan for multiple people to take over your clients and work to identify the best cultural and technical fit for each.
  • Before taking any action, contemplate the ripple effect. When you transition clients to the successors, what happens to the successors’ workload? In most firms, those talented enough to take your clients already have a full plate. Where will their excess work go? Develop a client transition grid for each of the successors to help them identify which clients they’ll need to transition so they can manage their new responsibilities.
  • Consider the big picture. Who else is retiring? When? And where will their clients go? You may think you have a clear answer for your client successors now, but when the next person retires, will you have accidentally shifted some of your clients to someone who is a better fit for the next retiree’s clients instead? Firms that make the mistake of taking these transitions serially sometimes find themselves transitioning clients more than once over the span of a few years—a course of action that doesn’t bode well for long-term retention.
  • Don’t saddle your best and brightest with C and D clients. As you prepare for transition, the priority rating I suggested above should highlight the most valuable, important client relationships (A’s), the pretty great clients (B’s), the clients that are “OK” but have some issues (C’s) and the clients that are pretty difficult to serve (D’s), because of culture, risk, payment issues, or their inability to value your services. Client transition is a perfect time to say goodbye to your D clients and, instead of saying “Joe’s retiring and your new service provider will be Sue,” you can tell your D clients that, “Joe’s retiring and, as a result, we regret that we are no longer able to serve your account.” In addition, if you have capacity issues in your firm or some of the retiree’s clients don’t fit your ideal target profile, some C clients may warrant a transition out of the practice as well.

When do I tell my clients?

  • After you tell your team. Before you begin telling clients, be sure that you have an agreed-upon position statement and communication internally. If you are two years from retirement, this might be something like, “John has been making plans for his next chapter and has shared that he plans to retire June 1, 2016. For the foreseeable future, he will continue with his existing client responsibilities. In the coming months, he will begin planning for client succession and will need the support of many of us to ensure a smooth transition over time. As more specific plans are made, we’ll keep you informed.”
  • Contemplate timing. Use your client grid to determine whom you will transition first and plan to transition groups of clients over time. Busy season is a perfect time to introduce new contacts to your clients, and slower time periods are great for your successors to reach out to their “intended” clients to show their interest and deepen those relationships.
  • Don’t try to hide your plan from key clients. Every retiree’s circumstances are different, but as a general rule, when you are within 18 to 24 months of retirement (two service cycles), it is appropriate to begin discussing your plans with your key clients. Some retirees fear a loss of utility or client respect once they advise their clients of their planned transition. In my experience, clients notice when their practitioner is nearing retirement age. They wonder what your plans are and whether they should be making plans of their own. Staying silent encourages clients to “make up” their own story, and that might cause them to develop an “on deck position” CPA relationship—outside your firm—to serve them when you retire. Be proactive about your plans and make sure that you have connected your clients with successor contacts they are familiar with and that they can trust.
  • Consider communications by group. Depending on the makeup of your client base, you may choose to tell your A and B clients in person and C and D clients via a letter or email communication. Ensure that when your firm makes the public announcement of your retirement, which should come well in advance of your last day, it is not a surprise to any of your clients. 

Transition your clients gradually. Carefully select, mentor, and empower your successors. Communicate honestly and with transparency. When you retire with intention, your clients will be far more likely to stay with your firm, leaving a wonderful legacy and assuring your firm’s success well into the future.

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Jennifer Wilson is a partner and co-founder of ConvergenceCoaching LLC, a leadership and marketing consulting and coaching firm that helps leaders achieve success. Learn more about the company and its services at www.convergencecoaching.com.