When leaders think of how to improve their customer’s experience, they often associate this practice with retail or technology services that are digital-first, transactional businesses. While the need for a positive customer experience is widely acknowledged, its importance across industries is highlighted by the fact that 86% of consumers say they would no longer purchase from a brand after only two poor experiences. Additionally, 73% of consumers cite experience as a main purchasing consideration.

Similar to technology and retail industries, accounting and advisory firms began increasing their customer experience efforts in recent years to focus on client retention and growth. This prioritization is still expanding across the industry, but there is no doubt that now is the time to implement personalized CX strategies in accounting and advisory client practices. 

A differentiator: Why CX matters in accounting and advisory 

In professional services, prioritizing the delivery of a positive experience can yield significant benefits for the organization as a whole. 

Focusing on client relationships and satisfaction can lead to longer and more productive partnerships, directly impacting the firm’s revenue. Organizations that prioritize CX strategies are 26 times more likely to experience annual growth of 20% or more. Additionally, nurturing existing client relationships fosters trust, paving the way for incremental projects and increased budgets.

Long-term client relationships also enhance efficiency for both clients and employees. Reducing client turnover provides a stable work environment for team members, creating opportunities for growth. Conversely, high turnover can hinder employee development, as they constantly onboard and offboard from various projects.

Prioritizing CX serves as a key differentiator in the accounting and advisory industry. When organizations seek new partnerships, client retention and growth metrics play a crucial role in decision-making. Firms that can clearly articulate their CX priorities, processes and successes will stand out in a competitive market.

Providing personalized client experiences

Gone are the days of transactional client encounters. The rise of technology, increasing client expectations and stiff competition have clients looking for much more than technical expertise. Clients expect firms to have deep knowledge and understanding of their industry, and their company’s unique day-to-day needs. To succeed in the current landscape, firms must provide personalized and proactive approaches to customer service. 

One of the most effective ways to provide a holistic approach to client relationships is having a dedicated team focused on understanding and improving the overall client experience. This team engages with clients at all points in their journey, soliciting feedback from prospects and clients to understand buying motivations, decisions and strategy as a neutral party. They can also host conversations with the client, separately from practitioners, to address questions and concerns. 

Practitioners, of course, build relationships and understanding with clients, but a dedicated CX team can take an “outside in” approach, starting from the customer perspective and driving inward to understand the internal changes needed to deliver growth. Enlisting a dedicated CX team provides a set of fresh eyes and new perspectives that can be helpful for practitioners who are closest to the day-to-day work and processes. 

This CX team is charged with checking in on clients proactively and anticipating potential issues before they arise. One way to accomplish this involves the CX team in client onboarding, so they can have time to learn the client’s goals, brand strategy and challenges at a firm level, separate from the expectations of the actual work product. This holistic approach can result in a higher client retention rate. Clients often say this approach has made them feel more seen and understood, and more likely to be loyal clients. 

Measuring CX success 

When it comes to measuring CX success, there are a few metrics that are commonly used. Both the Net Promoter Score and the Customer Satisfaction Score are used across industries to measure the overall customer experience. NPS is a metric used to measure customer loyalty with a company or brand by asking customers how likely they are to recommend a company or service to a friend or colleague. CSAT is a metric that measures how satisfied customers are with the firm’s services. CSAT can be useful for identifying issues or achievements at specific points in the customer journey. 

Both metrics are important for CX measurement, but when they are not used to their fullest extent, they are limited to acting as vanity metrics. Often, if a company scores well on either of these metrics, it is common to take these scores at face value and assume the customer is satisfied. Though NPS and CSAT can give your CX team insightful information, follow-up conversations and questions must occur to learn more about the client feedback. Closing the feedback loop with clients is paramount to gain their loyalty.

In addition to these metrics, the CX team should have consistent check-in meetings with clients to provide a space for feedback and questions. The best form of measurement is receiving consistent and honest client feedback across the spectrum of service delivery, from the proposal stage to user experiences with products and services to project closeout. The ability to share and receive feedback requires a level of trust and understanding that is vital in the CX space.  When firms lean on metrics alone, they miss out on important insights and information.  

The bottom line 

The days of transactional client experience in the accounting industry are fading. Firms must transition to a holistic and personalized approach, and be willing to dedicate resources to understanding the overall client experience. Though this approach will take time and investment, increased retention rates, higher revenue and employee growth are just a few of the potential successes linked to a strong CX program. Developing a separate CX practice within your firm allows for more opportunities to build client relationships and ensure that client needs are met and exceeded. 

The Financial Accounting Standards Board has decided to tweak some of its standards related to contract assets and liabilities for construction contractors in response to recommendations from its Private Company Council, as well as credit losses for financial institutions.

During a meeting last week, according to a summary posted to FASB’s website, FASB endorsed a recommendation from the PCC to provide an alternative for private companies to present contract assets and contract liabilities on a gross basis on the statement of financial position. The scope would be limited to private construction companies. The presentation alternative would apply at the entity level, and companies would be required to disclose when they elected to use the presentation alternative. The PCC and FASB both decided to require a full retrospective transition approach and related transition disclosures. But when a private company initially applies the presentation alternative for its contract assets and liabilities, it wouldn’t need to justify why that approach is preferable. FASB has asked its staff to draft a proposed accounting standards update that would be voted on by written ballot. There will be a 45-day comment period for the proposed update.

FASB also discussed another PCC project at the meeting on the application of the credit losses standard to current accounts receivable and contract assets arising from revenue transactions. It decided that private companies and not-for-profit entities (except for nonprofit conduit bond obligors) would be eligible for a simplified approach. FASB endorsed the PCC’s decision that the scope of the simplified approach would be current accounts receivable and contract asset balances arising from transactions accounted for under FASB’s revenue recognition standard.

Patrick Dorsman/Financial Accounting Foundation

FASB also backed the PCC’s decision to provide a recognition and measurement practical expedient and, for entities that elect the practical expedient, an accounting policy election designed to simplify the credit loss allowance determination. An entity that opts for the practical expedient wouldn’t be required to adjust historical loss information to reflect changes related to relevant economic data. The entity instead would assume that current economic conditions as of the balance sheet date will persist throughout the forecast period.

An entity that elects the practical expedient would be allowed to make an accounting policy election to consider subsequent cash collection after the balance sheet date but prior to the date the financial statements are available to be issued.

FASB endorsed the PCC’s decision to require an entity to disclose when the practical expedient and accounting policy election have been used, as well as to require a prospective transition method, with the ability for an entity to forgo a preferability assessment the first time it elects the practical expedient and the accounting policy election.

As with the contract assets and liability changes, FASB asked its staff to draft a proposed accounting standards update that can be voted on by written ballot, along with a 45-day comment period for the proposed update.

FASB chair Richard Jones and board member Hillary Salo suggested during the meeting that similar changes might be considered for public companies, although other board members seemed skeptical about the need for it. The board members seem to be open to at least including a question in the proposal about whether public companies want to use the practical expedient.

The days of the individual retirement account “stretch” are long gone. But the appeal of Roth conversions is enduring — especially under the current tax rates.

Expiring provisions of the Tax Cuts and Jobs Act at the end of 2025 that mean lower taxes on the conversion, the fact that Roth IRAs carry no required minimum distributions and, of course, the duty-free withdrawals for the owner or their heirs add up to a compelling case, according to Sarah Brenner, the director of retirement education with consulting firm Ed Slott & Company. The first Secure Act was a “game-changer for IRAs and Roth IRAs” due to the new obligation for beneficiaries to empty the accounts within a decade of inheritance, and Secure 2.0 “made some changes around the edges,” she said in an interview.

The situation for traditional IRA owners is “kind of like ripping off a Band-Aid,” in which they should just “get the pain over with,” Brenner said, pointing out that clients often have a misconception that “you’ve got to do it all” even though “it’s not all-or-nothing” because they could simply do a partial conversion as well.

“The Secure Act changed the game, and it has definitely led to, I would say, an even stronger case for Roth conversions,” she added. “You work with the rules you have, and you have a 10-year rule.”

READ MORE: Final IRS rules to IRA beneficiaries: Get going on those RMDs already

After four straight years of pushing back the implementation of that rule, the IRS has indicated that it will be going into effect at the beginning of 2025. Next year was already going to turn into one of the most consequential for tax policy in recent decades because of the possible sunset of the lower tax brackets and many other parts of the Tax Cuts and Jobs Act that will be high on the agenda for the next occupant of the White House and lawmakers in control of Congress.

Tax experts have been extolling the continued virtues of Roth conversions since passage of the first Secure Act in 2019.

“Though considerations around Roth IRA conversions have changed as a result of the Secure Act, Roth IRAs still offer advantages to account owners and beneficiaries,” certified public accountant and planner Joseph Doerrer wrote the following year in the Journal of Accountancy. “Roth IRAs are tax advantaged, and owners of Roth IRAs aren’t required to take RMDs. This can prove helpful in retirement, as it allows a larger amount of assets to remain in the account. Not having to take RMDs can also help account owners avoid creating unwanted taxable income, giving them more flexibility in retirement. Beneficiaries will enjoy a simpler tax situation, versus beneficiaries of traditional IRAs, due to the tax-free nature of their distributions from the account.”

The politics that led to more tax revenue flowing into federal coffers are now affecting personal financial decisions among advisors and their clients in the wake of the two Secure Acts, Sheryl Rowling, a CPA, planner and technology firm founder, wrote last year for Morningstar.

“Now is the time to do Roth conversion planning,” Rowling said. “By delaying retirement distributions, your clients can have additional years to convert IRA funds to Roth at lower tax rates. These changes all seem to encourage, even require, a greater emphasis on Roth rather than pretax retirement contributions. Although this means more money to the IRS as contributions (or conversions) are made, the opportunity to permanently exclude future growth (and previously taxed principal) from taxation, coupled with the elimination of RMDs, should be a big win for taxpayers in the long run.”

The Roth conversion offers a “huge advantage” over traditional accounts in that clients “never need to take RMDs from their Roth IRAs when they’re alive,” Brenner noted. For those inheriting Roth accounts, their “very compressed timeline” to empty the IRAs within a decade is arriving alongside distributions that won’t have an effect on their taxable income, she said.

“I could just let that Roth IRA sit there and grow for 10 years and then everything would be accessible to me tax- and penalty-free. This is the type of proactive planning that people can be doing. Right now, we have historically low tax rates. We don’t know how long that’s going to last,” Brenner said. “It’s a good time for people to be thinking about converting their taxable traditional IRAs.”

READ MORE: 5 ways to be a tax planning ‘rockstar’

For advisors and their clients, the decision comes down to a simple calculation that the “money is going to be taxed at some point,” she noted.

“You are going to have to pay a tax bill when you convert. No one likes paying taxes unless they absolutely have to,” Brenner said. “Somebody at some point is going to have to pay taxes, so it’s good to do it on your schedule.”