College enrollment in accounting programs has been declining for years , culminating in the current historically tight labor market . About 136,400 openings for accountants and auditors are projected each year , on average , over this decade , according to U . S . Bureau of Labor Statistics . Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force because of retirement or other reasons .

“ Many CPAs have retired , merged or had sickness or death ,” says Gail Rosen , a CPA in Martinsville , N . J . “ Young people aren ’ t interested in a job that includes the pressures of tax season . The experienced CPAs left are receiving many calls from wealthy clients looking to form a relationship who will give them the time and attention they want .”

The shortage is affecting the ways accounting firms operate .

“ Many CPA firms are no longer looking for or taking on individual tax preparation clients due to staffing issues ,” says Bruce Primeau , a CPA and president of Summit Wealth Advocates in Prior Lake , Minn . “ They ’ re looking for higher-margin business owner clients who present more opportunity for in-depth tax planning , financial statement preparation and perhaps audit revenue .”

The situation means clients need to be diligent when trying to find tax planners , advisors say .

Clients should probably look for enrolled agents or CPAs , says s Morris Armstrong , an enrolled agent and RIA at Armstrong Financial Strategies in Cheshire , Conn . These professionals “ should be communicative and be willing to discuss a situation with the client ,” he says . “ Taxpayers need to realize that they can ’ t just drop off documents , but that they have to tell their story .

“ If you have foreign assets , a business other than sole proprietor , are a trust beneficiary , have invested in partnerships , [ then ] you better have [ a preparer ] who understands those flows regardless of your income ,” Armstrong says .

“ A tax pro needs to understand the nuances of the return . It ’ s not good enough to look at last year ’ s and try to mimic it .”

Wealthy clients need to make sure that when they engage a new CPA firm that all loss carryforwards and basis calculations from prior years are accounted for , Rosen says .

Fees should be commensurate . “ A toolow fee may indicate a lack of experience ,” Armstrong says . “ There should be a time frame for completion . ‘ Two days before the filing deadline ’ is usually the wrong answer . If a preparer makes liberal use of extensions , I ’ d ask why . A preparer should also be able to tell the client what the client is responsible for ,” Armstrong says , adding that the client probably wouldn ’ t use a preparer who didn ’ t employ an engagement letter .

Joshua Hanover is a managing director at CBIZ Marks Paneth in Boca Raton , Fla . Whenever he is introduced to a prospective client , “ one of the key questions I ask pertains

to their relationship with their previous tax professional ,” he says . “ I use our initial conversation to qualify whether I see potential in the relationship . If I hear that the reason they ’ re switching is due to retirement , it ’ s music to my ears . They ’ re not likely to be the type of client always looking for a less-expensive option or where the grass is greener .”

The prospective client should have their own list of qualifications they ’ re seeking in a preparer . At a minimum , Hanover says , vetting a tax pro should include the confirmation of their credentials and licensure , the credibility of their firm and a review of their records for disciplinary actions .

These , he adds , are other considerations :

• Where did the introduction to that professional originate ? Did the person making the introduction have a reason to make that particular referral ?

• What does the professional ’ s practice look like and how closely aligned is it with your situation ?

• Can the tax pro grow with you and handle your evolving needs ? Does their organization have the resources to stay ahead of changing economics , business / financial cycles and evolving legislation ?

• Is this the type of person you ’ d enjoy working with ?

— Jeff Stimpson

significant gap of negative 15.8 %, Morningstar reported .

How can investors keep more of their gains ? One way is to use allocation funds , which “ also help mitigate the risk of mental-accounting mistakes that investors are prone to , such as buying more of a

high-performing stand-alone strategy and selling a lagging one when they should be doing the opposite ,” he adds .

Steering away from riskier funds also can save investors from performance gaps .

“ Interestingly , we found larger gaps in areas and styles for which there is robust academic support , like tilting to value , smaller-company stocks , or emerging markets , suggesting that the added volatility these strategies entail cost investors any excess return they might have earned and then some ,” Ptak concluded .

— Tracey Longo

SEPTEMBER 2023 | FINANCIAL ADVISOR MAGAZINE | 11