Originally published on Forbes.com.
See Clarification
It seems like I should have a dog in the current fight between AICPA and H&R Block. I am a dues paying (really expensive dues by the way) member of the AICPA. I could probably be a card carrying member if I rifled through enough drawers and found the card. You might be surprised to learn how infrequently you have to prove AICPA membership.
A Controversial Ad
Anyway the flap is over this commercial that Block is running about its new service called Block Advisers
“We know consumers have different needs and that taxes are not a one-day-a-year event for many of our clients,” said Kathy Collins, H&R Block’s chief marketing officer. “Block Advisors delivers specialized, personalized tax planning and preparation. The tax advisors staffing Block Advisors offices are available year-round to answer questions and meet with clients when they need it.”
Block Advisors’ tax advisors average 15 years of tax preparation experience. Many of the tax advisors are Certified Public Accountants, Enrolled Agents or have received H&R Block’s highest level of certification.
Here is the ad that has AICPA CEO Barry Melancon steamed up.
About 28 seconds in, the explicit attack on CPAs begins with “Speaking of expertise, many CPAs don’t even specialize in preparing tax returns.” The real money shot is coming though, when you are encouraged to ask your CPA “Who actually prepares your return?”
The ad has prompted a strong response from AICPA
“They are misleading and question our competency, practice standards and ability to represent clients before the IRS,” said the AICPA.
Block’s CEO, Bill Cobb, was unimpressed as related by Going Concern
I’m so confident that just today I have directed my marketing team to increase the media buy for Block Advisors. Soon we’ll be airing in additional markets, telling exponentially more taxpayers about Block Advisors. And we’ll be doing it with a special offer: Anyone who comes to Block Advisors by March 31st will get half off what they paid a CPA or anyone else to do their taxes last year.
Who Is It That Actually Does Your Return?
So why am I just getting out the popcorn rather than taking sides in this conflict? What Block Advisors is promising is giving people access to the type of relationship that many people have with CPAs and EAs and even the occasional preparer, like Bob Flach, the Wandering Tax Pro that earned us the title “Trusted Advisor”. Somebody who knows the tax law in a practical sense and knows and understands you and tailors their practice to your foibles or perhaps practices tough love to get you more organized. If you are ever audited they will defend you tenaciously and if necessary fall on their sword for you. When it works really well they will complement your personality, reassuring the timid and restraining the overly aggressive.
Can Corporate Cultures Deliver Trusted Advisors?
I doubt that a publicly held company will be able to create the culture that will deliver on that model. My reason for thinking that is that it is pretty clear that as firms grow in size, they reach a point where they become incapable of delivering that type of service as they become obsessed with their leverage models.
The reason that the H&R Block “Who actually prepares your return?” question is the money shot is that at many national and large regional CPA firms, the answer will be “Somebody in India“.
At my last job in a not quite Big 4 firm, more nimble you know, I referred to them as “our brothers and sisters in Bangalore” and frankly, they did an OK job, although it often seemed that American staff spent more time getting work prepared to go to India than they might have spent actually doing the work. What didn’t go to India, needed to be “pushed down”? It sometimes seemed like we would soon be asked to have roommates of interns do the actual work, so we could all be more consultative.
Hard Returns Are Hard
The thing is the book length tax returns that people of complex affairs tend to have are really pretty hard to do and the most gifted preparers are among the least rewarded people in the profession. Plans hatched by the brilliantly consultative are of little value if they don’t actually get translated into returns. Getting into the weeds of the returns is necessary to do good planning. Planning and compliance really need to be seamless.
CPA firms have made themselves vulnerable to this attack by Block (and it is an attack) by cashing in the “Trusted Advisor” role – turning it into a brand rather than a calling and continuing to try to charge a premium for commodity service. If you listen closely, you will hear the weakness in Block’s offer. Their promises are “backed by all the resources of a national brand”. Brands are abstract images. They represent the promise of resources, not the actual resources.
So bottom line, I think Block’s suggestion that you meet the person who is actually preparing your return is a challenge worth making to whoever is seeking your business. If you are dealing with a CPA firm, there is a decent chance that they will not be as charming and well-dressed as whoever is trying to reel in your business, so be prepared to be tolerant.
Meanwhile, I’m hoping this fight continues for a while. I’m enjoying it. To heck with the popcorn, time for the Junior Mints.
Clarification
I heard from Tom Collins of H&R Block who wanted to make something clear:
…you suggest that we outsource tax return preparation to India. Let me be crystal clear on this point: We do not outsource preparation of our clients’ tax returns to India or anywhere else! All assisted tax returns are done in our offices, by our tax professionals, using H&R Blocks proprietary tax preparation software.
My intent was to emphasize that many regional and national CPA firms engage in that practice, something that the question in the Block ad might draw attention to. I did not mean to imply that Block was outsourcing to India and actually don’t think I did, but I am happy to clarify.