UNDERSTANDING TAX CLIENTS
To My Fellow Accountants
“Our mind is in some instances active and in other instances passive. Insofar as it has adequate ideas, it is necessarily active; and insofar as the mind has inadequate ideas, it is necessarily passive.”
Proposition 1, Part III, Ethics
Every Client is Different
The primary cliché of our profession of taxes and accounting is that every client is different. This is true, but trivial. A deeper and truer insight is that clients sort themselves into patterns and categories and recognition of this assortment makes it possible for accountants to provide better service to their clients.
The word client comes from the ancient Latin root clientia, which means “to lean upon.”
True intelligence must systematically and comprehensively understand everything that is relevant, including human psychology and behavior. Accountants must apply mathematics, and good judgment, not merely to dollars but also to people.
All tax clients can be classified according to where they fit on a spectrum which measures the intensity and scope of their desire to achieve tax savings, and how they view the task of preparing tax returns. Below, I discuss my own humorous stereotypical extremes between which all clients fall. While no real client is likely to personify these extremes, they are useful for the purpose of understanding clients in order to provide not only better but more relevant types of service.
Conflicts arise between accountants and their clients when the preferences and needs of clients are not understood by the accountant. Behind every tax return there is a living, breathing person who the accountant must understand just as well as tax laws, the laws of arithmetic, and the rules of the accounting profession. Anything less than this is not good enough.
What do accountants really do? My answer: We create order from disorder; we transform raw data into knowledge and insight.
Complacent cats represent one extreme of the spectrum of tax clients. These are individuals who are NOT motivated at all to search for, find, and implement new ideas. They tend to be hostile to new thinking and fear change. They like and enjoy the status quo and view tax preparation as a boring, mechanical task to be discharged once per year. Complacent cats perceive accountants as clerical labor and human typewriters who simply add up the numbers, print out a tax return and then crawl back into the woodwork where they belong.
Here are the key characteristics of Complacent Cats:
• Content with status quo
• Threatened by and distrustful of change
• Yawn at tax saving ideas
• Not motivated by money
• Not interested in new ideas
Accountants can maximize service quality for such clients by providing quick, efficient work that delivers stability, order and predictability. When it comes to tax saving strategies and new ideas the best approach with Complacent Cats is ‘don’t ask, don’t tell.’ The accountant should attempt to become as invisible as possible. The best way to please such clients is to get the business of preparing their taxes over with as quickly and painlessly as possible and with minimal communication. If you do end up saving such clients money on their taxes don’t expect a thank you.
It is not the case that all complacent cats are superrich. The motivations which lead them to have their characteristic set of beliefs can arise from an abundance of resources, a shortage of motivation to learn new ideas, or an extreme distrust of different ways of doing things. Whatever their motivations, the desire of Complacent Cats to be left alone must be respected if you wish to serve this type of client. Never include Complacent Cats on your monthly newsletter which describes the latest developments in the world of taxation and never mention exciting new ways to achieve tax savings.
Because accountants are trained, educated and driven to find ways to reduce taxes this type of client can be extremely challenging to service.
COMPLACENT CATS FIND ACCOUNTANTS BORING AT BEST, ANNOYING AT WORST
The opposite end of the spectrum of tax clients is inhabited by Eager Beavers who yearn for new and exciting ways to achieve tax savings. Eager Beavers are indeed eager to engage in vast and costly labors to reduce their tax bill (as well as to build enormous dams) and have their accountants on speed dial.
You will hear from Eager Beavers often, sometimes before you yourself learn of the latest developments in the world of taxation. They will be extremely angry and upset if you fail to bring to their attention every possible way to reduce their taxes. Eager Beavers will climb Mount Everest to save money on their taxes, even if they are at risk of falling off a cliff. This type of client is always uneasy about the status quo and nervous that they are missing out on ways to cut their tax bill. However, Eager Beavers can be a pleasure for accountants to work with because they are never more than one or two steps behind you and will listen with rapt attention to everything you tell them. New tax developments which you read about in professional literature today may appear in newspapers tomorrow and that’s when Eager Beavers will call you for more information.
Here are the key characteristics of Eager Beavers:
• Will climb Mt. Everest to save money on taxes
• Not threatened by change – they fear stagnation and missing out on savings
• Highly motivated by money
• Curious about new ideas
• Ecstatic about new ways to save on taxes
While it can be fun for accountants to work with Eager Beavers, the danger is that new ideas will be implemented before their implications and consequences are fully understood. The rule that accountants always and everywhere should follow is clear and simple: think first, then, think again. The novelty and intellectual thrill of finding ways to reduce tax costs must always be balanced by practical considerations including the cost of implementation, the expense of constantly changing ways of doing business, and the uncertainties and risks of change.
If Complacent Cats make accountants feel like a loser, Eager Beavers make accountants feel like superman. There is danger in both cases. The highest human authority possible in this world is the earned authority achieved by a supreme command of logic and facts. It is not possible to go beyond this. Nor is it possible for the competent to sink below this status, regardless of the impertinent judgments of others.
The best practice for accountants to follow with Eager Beavers is both restraint and self-restraint. Think. And think again. Follow the advice of the great philosopher Spinoza when he said “Caute!” Take caution and think ten steps ahead instead of just two or three.
EAGER BEAVERS LOVE ACCOUNTANTS TO DEATH
Dangers of Stereotyping Clients
Accountants have a duty of loyalty to every client, regardless of the specifics of who the client is. Every client is a real person, not a classification, and not a stereotype.
A few years ago I had to visit the emergency room at 2 o’clock in the morning. I had an incident of hives which caused facial swelling and bumps all over my body. The personnel in the ER were curt and impersonal. During the ordeal of being tested, having blood drawn, and vital readings taken the ER personnel kept up a running banter. “It’s a laptop” one of them cryptically said to the other.
What did this mean? After reflection, it was clear they were stereotyping me as a business person who used a laptop, who dressed professionally, and who did not belong to their own world of people who work in the ER at 2 o’clock in the morning.
Pattern recognition can, should and has been used to classify galaxies, atoms, major league baseball pitchers, prime numbers, clouds, stock market trends and many, many other things. But pattern recognition should never be used to dehumanize people. People may legitimately be treated as units of information in order to gain further understanding and provide better service, but not for any other purpose.
There is both danger and potential in knowledge. Accountants must avoid dehumanizing their clients while simultaneously benefiting from insights into the nature and needs of the real people they serve.
Certified Public Accountant Master of Business Administration
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