Peter: I am so excited today to have on my podcast Steve Sacks. Steve and I met in Las Vegas at a CCH conference and he was one of the attendees in my “Leveraging Your Leadership Using Improvisation.” And we had such a spirited conversation, after that I actually visited Steve in New York. And I want to keep this dialogue going that we’ve had. So, first and foremost welcome to the podcast Steve. I greatly appreciate you taking time out of your busy schedule to spend some time with me in this conversation.

Steve: It’s my pleasure Peter. Thank you for inviting me to join you.

Peter: You’re more than welcome, and I’m so looking forward to this conversation and the nuggets we can pull out from your wisdom and experiences over the years. But I guess a great starting point is, tell my audience a little bit about yourself, about your background.

Steve: Well, I’m a CPA by training and experience. I had several years in public accounting with midsized firms and a large firm, but I was always more of a right brain thinker, the antithetical CPA. So, I was never enamored by numbers and wanted to know what generated those numbers, why they are different. Giving a financial statement to a client three months after the fact and just signing off on it was no value add for me. So, I got into consulting early on before I joined the AICPA. And when I was with the AICPA I was involved in a number of initiatives that I’m proud to say still exist very strongly today. One is leading the developing of the ABV credential and starting business valuation litigation services and conferences back in the early 1990’s. I was also involved in writing the first set of consulting services standards and helped develop the framework for the second one, which was focused on business valuation. I developed award winning newsletters. We had a member section for those who wanted to pay an extra stipend to be a part of consulting services, a membership section where they would get various communication on materials and conferences and things of this nature. Again, keeping the mindset of the right brain aspect, from there I had my own consulting practice which did not involve accounting but involved communications and marketing communications—any form of external communications, press releases position papers, speeches that I had written for a number of people, newsletters that I had written for a state society. And then, after that I was part of this organization called Global Alliance, comprising eight Top 100 firms that decided they got too big for their own association, so they decided to come together. And we formed that and then we went searching for another organization that already had international growth rather than going to all four corners of the globe. So, we formed from the Global Alliance which was the name of the organization in merging with Moore Stevens North America. I was at the helm of that organization for eleven years which then takes us to the present day where I have now revived my company, Solutions to Results, whose tagline is, “When Identifying problems just isn’t enough.” Why I look at it like that is because every time, whether I was putting conferences together or using consultants on a personal basis, professional basis, it’s always easy to find the problem. Then you write them the check and nothing is changed. So, I say that you must go from problem identification to determining and uncovering solutions and not stop there. Because what usually happens when using Consultant A, and Consultant A takes you to the next point and then you have to hire Consultant B who will take you to the next point. But you really don’t have a one stop shop. So, that’s what I’m looking to create—a differentiation between other consultants out there. Whether I do this solely, or I do this as a strategic partner for other organizations that need to uncover and provide the solutions—and most important to implement those solutions. We don’t want to wash our hands and say, “Here’s my proposal. Give me my check and have a nice day,” then stick the report up on the shelf. As you are well aware, this is what happens often. Peter: That is awesome. I love that concept, but I want to back up just a moment. I knew there was another reason why I liked you so much, because we share a lot of the same qualities. We’re both right brain people living in a left brain world. And I call myself the accidental captain because I can’t pronounce the antithetical CPA. It’s way above my pay grade and there’s too many syllables. But I love the fact that we did meet and we both have that commonality of communication of the profession. I can tell by your voice that it’s a profession that you love, that you’ve grown up with. But you’ve found a different way to help the profession move forward with your work with Moore Stevens, at the AICPA, the right brain side of your personality, how it’s morphed itself into. And I love the tagline, “Identifying problems is not enough.” You’ve nailed it. It’s not enough, even providing solutions, but there’s always something. It’s an ongoing fluid process.

Steve: I agree, and the thing is, when you only get a slice of the pie from one consultant, then have to go to another consultant and another consultant, what it does is it muddies the market place. And you don’t have any points of distinction. Why should I go with Consultant A versus Consultant B versus Consultant C? And then we rely too much on consultant speak and all the fancy lingo. So, if I say something to a client and that client, he or she is completely befuddled, then it means I’m doing my job. I haven’t said anything worth a darn but I sound intelligent. One of the things that I find to be a contradiction, is here we are relying on technology these days. Yes I get it, it’s to make the work day more efficient. But what about the next generation that’s coming out, you know, the digital natives? What they’re doing is exercising their thumbs and not looking someone straight in the eye and speaking. Accounting profession is, you would agree with me, is a relationship building profession.

Peter: Right.

Steve: So, we shouldn’t devote so much time to the technology which then will displace people, create hire unemployment. There’s got to be a way to use technology to make us a little more humane and a little bit more right brained. And I don’t mean to say that everybody needs to be a citizen journalist, you know, to think that they could opine on anything with a hundred and forty characters. But truly to listen, you know? I heard this a long time ago when I was little, “Steve, you have two ears and one mouth so you might as well be listening twice as much as talking.” And the listening part is very important. And I think with consulting—going back to our focus of consulting—don’t ask the question and then use the time that the other person is responding to think about the next question. Was that question that you asked relevant? Are you trying to get to the end game? Have you come prepared? Do you know what the client really wants? And we’re not talking about a one size fits all. Again, it has to do with relationship, it has to do with communications, it has to do with looking at things not myopically but with a wide angle view.

Peter: I can’t agree with you anymore. You hit it right on the nail. That’s my message that I’ve been trying to promote through my book, through this podcast. I believe in technology and I believe that technology has a place, but email is not the only form of communication. Email does not build relationships. Eye to eye contact, grip and grin, call it old school, I just call it a tactic. When I can look somebody in the eye and meet them I almost immediately can determine if I have some trust with this person or not have trust for this person. You get a lot of organic information from body language and stuff that tells you a lot about what you’re not seeing or hearing. And as it relates to listening, and Steve has read my book, and actually I met him in New York in December—he and his colleague. And I was really blown away because in the conference room he had my book open, he had it marked, he had it dog-eared, he had tabs in there and underlines. And this whole thing with improvisation is the ability to listen, to understand, hear what the client is saying, and then be able to adapt to what their needs are, not what our agenda is.

Steve: Exactly. And that’s why, when you’re trying to make points of distinction that you want that prospective client to walk away and say, “You know Peter or Steve really cared and wants to be a partner.” We use the technical term of art in the profession but we should say partnering for someone’s success. I want to be a partner with my client’s success and I can only do that by listening and asking questions. There was an article that appeared in the New York Times a few weeks ago that was in the business section. I think it was titled something like, “Talk less and ask why more,” because you start to understand and put things together. Because if you’re always talking, you’re not going to be able to read between the lines, and your point about body language is well taken. You know, attorneys hire body language coaches when they’re doing preemptory challenges for witnesses in the course of developing a jury for a case. It’s very, very important. There are books out on body language: “How to appear more open and friendly and approachable” versus “You don’t cross your arms because it means stay away. I’m offensive. Prove to me what you’re saying is right.” Email is fine for quick hits but even then email is abusive. Number one, you don’t want to deal with somebody’s issues so you give them a quick response back. So, it’s ping pong. OK. Now the ball is in that other person’s court. So, I just wiped my hands of it, but no you didn’t. All you’ve done is defer a problem that’s going to fester more and more. And since I’m a words person, tone has a lot to do with it.

Peter: Exactly.

Steve: Don’t call me something nasty, write it down, and then give a smiley emoji. There’s something a little paradoxical about that.

Peter: That’s right. Any time I find myself in an email ping pong contest, I immediately pick up the phone and have a phone conversation because confusion—it’s so easy to create confusion through that. As well as I can gather the tone from your voice, I can gather the tone from your body language, but I can’t gather the tone through an email, through Twitter, through posting on my Facebook page or anything like that. And you said this early in the conversation that we as CPAs are in the relationship building business. We provide services. But I love asking audiences this question: “What business are you in?” And CPAs go, “Oh, I’m in accounting. Oh, tax.” Oh, no. You’re in the people business first and foremost. Without people, you have no employees, without people you have no clients. So, the better that we can develop our people to be relationship builders, that’s how we build businesses, that’s how we grow careers, through the ability to build these types of relationships.

Steve: I agree. And your presentation that I and my colleague sat through in Vegas was one of the most enjoyable, especially since we participated in some of the physical exercises which was really out of my comfort zone. She pushed me to do it. And you went up to the first guy in the row in front of me and said, “Pick somebody.” And he turned around and picked somebody, and he turned around, and it gets to the row in front of me. And I’m saying, “Please don’t pick me. Please don’t pick me.” He picks me. And then my colleague is laughing, and I go, “I pick you.” So, anyway that was really fun. I remember you asked, “What business are we in?” And people were sort of flummoxed at the question a little bit—taxes, auditors—but it is building relationships that lead to success. Now here’s the $64,000 question. You and I are around the same age, give or take. Back in the day, when we entered public accounting, it was the new staff person never went out with the partner to meet a client, to see what goes on behind the scenes. That was forbidden.

Peter: Right.

Steve: Now some of the firms are seeing that it makes sense to bring the younger people in so they understand how to comport themselves in a meeting, how to listen, to look at the body language, to listen to the questions the partner is asking, how he or she is asking questions , how the client is reacting. You’ve gotta be able to bring up the next generation sooner rather than later—and if the profession doesn’t realize that sooner rather than later, it’s gonna shoot itself in the foot. And there are gonna be people that just get their CPA and disappear into the night, going into the private sector or doing other things. It’s so important that you allow the younger people to have an intellectual investment in the firm, that you bring them to the client, you show them, you introduce them because the client has to have a level of comfort. And that’s not to leave out the fact that you also want your firm to be representative of the demographics that your client base is a part of.

Peter: That’s a very good point and actually in the May addition of Accounting Today, I had an article published, “It’s Time to Get Out from Behind Your Desk,” which really talks about a lot of what you just said. And you’re right, you never took first or second year staff out. We need to provide them with more than just technical skills. If we take it from a firm perspective, the first five years, they’re being shoved with a tremendous amount of technical knowledge—which we need to be technically sound—but then we put them in a role of a manager. And now we’re telling them we have to develop people, they have to develop business, but they don’t have the skillset or haven’t been able to develop that skillset. And basically we’ve done what Peter Drucker coined as the Peter Principle—we’ve promoted them to the level of incompetence. And a lot of times they’ll leave. Or those who have that right brain aspect of it will service and continue to grow. But we need to invest in our people earlier with what they call soft skills, which they may sound soft but really they’re hard, and they’re really hard for a lot of people to master. And I think the quicker we as a profession do that, the better off we will be in the long run.

Steve: I agree. Even something simple as how you comport yourself at a business meeting, at dinner meeting, knowing the right fork to use, knowing where to put the napkin on the chair if you’re coming back or to let the waiter know if your meal is over. These kids came from frat houses and now they’re in the real world. In our day, or at least in my day, the bestselling book was Dress for Success. Now, there’s a wide school of thought around how CPAs should dress. Some firms, now because of Gen Y’s, are replacing their dress code. They can wear jeans all through the week, except of course if they’re meeting with a client. They’re looking to sort of silicon valleyize the firms. You know how all the startups of the late 90’s and 2000’s—not that the magic pointer is going down the hallway on a razor scooter—but you know just to relax the environment because you’re at multi generation work places now. You have the sixty year old and the twenty-five year old. And the twenty-five year old is trying to sell the idea of business development using Twitter or Facebook, and the sixty year old is from the old school of face to face and professionalism and ethics and all the tenants of the profession that we grew up knowing. You have a disconnect there. So, firms are going to have to find a way for the twenty-five year old and the sixty year old to meet in the middle. And that, I think, is going to be a very key factor particularly in the next nine or ten years. 75% of the existing firm leadership is going to be retired, so how is that going to impact the way business is done? Is it now going to be new generations are dealing with new generational clients, and it will be different than the way you and I did it, or the way our predecessors did it? I don’t know. But I do know one thing, and that is if firms want to retain a legacy and long term viability they cannot say to a candidate, “You know what Peter, in twelve or thirteen years we’ll make you partner.” They’ll say that on campus recruiting. No, I’m sorry that doesn’t cut the mustard anymore. They’re gonna look at you like you have three heads. That’s why firms are now saying we need to build leaders sooner, faster, more effectively give them all the arrows in the quiver that they need, so by the time they’re twenty-eight or twenty-nine that wasn’t a mountain to overcome. That was, you know five or six or seven years rather than thirteen years. So that’s going to be another sea change that we’re going to see in the profession. And maybe the next generation will determine how to build leaders faster than the current firm leadership. What is your thinking on that?

Peter: I couldn’t agree with you more. As you were describing this, I went to another aspect of current leadership with firms needing to change: succession planning. And I’ve talked to—in my audiences—people in firms who are at the manager level. And I ask them, “Do you want to make partner?” And 75% of the time it’s, “No because I see the way the partnership is run.” And I had one gentlemen say that a partner put a file on his desk and said, “I want you to handle this transaction this way.” And he looked at him and said, “No. I think I’ve got a better way for it.” And I credit the partner. According to this story, he said, “OK. Tell me what you would do.” And he told him. And he said, “You know what, that’s a better idea.” So, the manager, I guess, got a little cocky and said, “If this was my firm I’d run it differently.” And the partner said, “OK, tell me how you would do it.” And he said, “I wouldn’t have ten partners. I’d have twenty. I would spread the work out, spread the wealth out so we won’t burn ourselves out and kill ourselves. And we need to become more creative and think outside the box.” He then went on to explain that they have a monthly creative meeting where they’re trying to come up with new ideas. They’re trying to build that succession plan internally versus, I think a lot of firm succession planning is being bought, and being gobbled up. When I think about this, I try to acquaint a lot of stuff to improve. I think firms have to be able to adapt a lot quicker in today’s day and age then they ever had in the past. And listening and hearing the client, hearing the associate, and truly parking their agenda for a moment and trying to live in the other person’s reality, will give them a better feedback. And what are the needs and wants of my client, my internal client that I want to build a relationship with? Because I want them to become partner, or I want them to become CFO as well as my external client as well. And I think that that’s a big challenge out there. But I believe that we can master it once we accept it. And I’ll just take one additional step: most CPAs have never read the AICPA twenty, twenty-five horizon projects on the core competencies that are needed in this profession. And I’m not going to tell the audience all of them. I would highly suggest that they go and download it and read it. But it didn’t say anything in there about debits or credits or code sections or codification. I saw leadership, communication, synthesizing, critical thinking—these types of skills. And this is what, in our opinion, we need to have a greater investment in the profession today in order to build a better tomorrow.

Steve: I agree wholeheartedly. And it’s nice if you have professional looking marketing collateral, and you talk about culture this culture that. But many times I see that they’re not walking the talk. And culture is a very big thing, culture will be the determining factor whether you’ve created a home for that future star or not. It used to be that back in the day, if you job jumped ten times before thirty-five, you were toxic, radioactive. But then it turned around to expect somebody before thirty-five to move around because of opportunity or pay or this and that. But I say there’s nothing wrong with loyalty that is wrapped within commitment, accountability, responsibility, and respect. There’s an important factor that someone who’s a staff person being given the opportunity to become partner has to change their mindset from an employee to an owner. Back in the day, when you were a partner all you did was kick in a capital investment, had your book of business, eat what you killed—you know, all the usual jargon. But now you have a responsibility for building the next generation of leadership. You have to be a coach. You have to be a cheerleader. You have to be an SOB. You have to be a confidant, a rain maker. You have to have some technical knowledge. You have to have some strategic mindset. And there are a lot of people that are saying, “You know what? I didn’t really sign up for this. I can’t manage people.” So, what they do is, they’re really good technically and they can be lifetime managers and occasionally they’ll bring in business, but they don’t want to be shackled with the whole idea of being a partner. You know how we always say that by 2025, 75% of the existing leadership will be retired? I will say that in the next fifteen, twenty years that the partnership model that we have seen, which is a pyramid, is gonna be—I won’t even say turn on its side—it’s not going to look the way it looks anymore. I think the accountability, the metrics, everyone’s role understanding the impact that they play in building a business, is going to be more and more of a corporate model. Certainly there are some firms that are looking at that, but that is more of the exception than the rule. And why would you be a partner and do manager level work? I’ve seen this a lot. You build the client and then a manager is stuck between a rock and a hard place because they have to report to the partner and they have to manage all the engagements. The model doesn’t work. And you talked about burnout before. That’s exactly what’s going to happen. So, that example of the guy you said, “We shouldn’t have ten partners. We should have twenty partners and spread. But the most important thing is that we don’t burn out.” And that is the very key thing because people I speak with now, they’re tired. It’s too onerous. It’s lost its cachet over the past number of years. It’s still a great profession, but you as the leader of a firm, the tone at the top, just like the tone at the top of a corporation, tone at the top in a partnership where there’s a sense of a esprit de corps, where you understand that your client is not your client but the firms client, especially if you can leverage the skill sets of another partners helping that client solve an issue. Otherwise the client says, “Gee, I spoke to somebody down the block who said they can do this. And you never told me about that. I think I’m gonna go with them.”

Peter: I want to touch on something you said at the very start of this about culture. One of my podcast interviews is with Karen Young of HR Resolutions. And she was talking about the hiring practice. And she threw this huge boulder my way. And basically what she said, within her organization, she doesn’t have the applicant fill out the application first. She has the applicant go out to the website and look at the mission, vision, and core values of the organization. The first conversation that they have, even before an application is, “Well, now that you’ve seen our three things, how do you fit into our organization? How do you fit into our culture?” And then she sits back and listens to their response. Based upon that, she determines if it’s a good fit or not. And if it’s a good fit then the application will come in the traditional hiring practice which I thought was brilliant. And she said, since instituting that, their turnover has declined dramatically because they’re putting people in who want to be there, who believe in the culture, and then can accept that culture. They’re more likely to be invested. There’s some type of an emotional investment into it. It becomes, to your point, “I’m not an employee. I’m a partner of this organization. I’m part of this wheel that turns.” And I take that little piece of advice, and I’ve shared it with a number of people since I’ve heard it. And they’ve all gone, “Wow. She’s got it right. We’re doing it backwards. We’re telling them about the mission and vision of the organization once they’re hired as part of that onboarding process. No, we should be doing it upfront and foremost and have it filter its way through.”

Steve: Absolutely. And there are two points I want to reemphasize of what you just said. The first thing is, interviewing people is a lost art. First of all, many times the wrong initial person is interviewing the candidate. Secondly, the right questions are not being asked. Interviewing and extracting things out is an art and very few people have that capability. The second thing that you said that firms don’t do a good job on, is onboarding. You should at least have someone assigned to you that’s like a mentor for your first day. And those firms that care about their people will introduce the concept of a career roadmap to that new employee on day one, so that at any one point the person knows how he’s perceived within the firm and how his performance has been. And do you think he wants to hear the words “performance evaluation?” No, no. That went the way of tie dye shirts and bell bottoms.

Peter: I couldn’t agree with you more on the performance review process. It needs to be more of an on demand type of feedback. And you know what? You shouldn’t have a formal review. You should have had it throughout the year. Maybe we come together for a meeting and discuss your compensation but not the, “I’m walking to my bosses office and I’m about to get the guillotine because it’s my performance review.”

Steve: Also, never have a performance review and a compensation discussion all at the same time. Peter: I couldn’t thoroughly agree more. I don’t want to take up too much of your time, Steve. Once again, I greatly appreciate this conversation. I think that we could probably put together a two hour episode. And while I’m thinking about that, I’m gonna ask: in the near future, I’d love to have you back on and pick up on where we leave off and just kind of keep building on this conversation that we’ve started. You bring a lot of great insight into it. You bring a lot of great insight because of the different areas within firms you’ve worked, within leadership, and being that right brained person in a left brain world. You’ve got some real solid ideas that I know what my audience should be gravitating around and should be trying to implement on a daily basis. Steve: Well, I appreciate the kind words. And I’d love to participate in any subsequent discussions you want to have. We can delve in to general things or we can dig into more specific things at greater length. It would be more than my pleasure

Peter: Well I’m looking forward to it. Steve, thank you so much again for taking the time. I’ve learned a lot. I love the conversation and the conversations that we’ve had in the past. And we’ve always seen things from a slightly different perspective then maybe most in our profession which is a really good thing.

Steve: Thank you. I greatly appreciate it. My pleasure. Have a good day, take care now.

Peter: Hey, welcome back everybody. I’m extremely excited today, as I always am, when I get to interview someone for this podcast. But today I’m interviewing a good friend of mine, Karl Alirichs. And first and foremost, Karl, thank you for taking time out of your busy schedule. I greatly appreciate you parting your wisdom to my audience on this podcast.

Karl: No problem. It’s a lot easier to tell other people how to live their lives then to do a better job living my own.

Peter: Well said my friend, well said. Prior to us getting started we were talking about some themes that we were gonna discuss. And Karl wanted to start out with scary trends, ethics, and uncommon senses. Can you help us with that?

Karl: Yeah, let’s start with the end of that, uncommon sense. Everybody thinks they want common sense. But if you look it up, basically the commonly held beliefs of the group or society are called common sense. Well they aren’t working so we need to go to the next step which I’ve decided to call uncommon sense.

Peter: And what is that next step?

Karl: Paying attention to a couple of storm clouds that are on the horizon. If you can be ahead of your class by one page, they consider you the expert. And in modern times we’re all fighting to be a page ahead. So, I want to point out a couple of trends. And understand, I am a human resources person, a human capital person, who is bilingual with finance and the finance profession. I go into rooms of Chief Financial Officers and explain human capital to them. Then I flip it and go into rooms full of human resources professionals, and explain finance to them. I actually use the same slide, I just run in backwards.

Peter: And you’re able to make that connection between really left brain people and right brain people, which is a gift.

Karl: Well I’m in the middle; I’m an ambivert. You know, there are some introverts and extroverts. I’m an ambivert.

Peter: It sounded like you said ambienvert, which means you take…

Karl: I’m not on drugs.

Peter: OK. So, tell us about some of these storm clouds you see out on the horizon.

Karl: We’ve got a perfect storm. Peter, how’s the economy?

Peter: I’d say it’s getting better. It’s better than it was some years ago.

Karl: Is that a problem? Yes. To speed things up here, I’ll answer all my rhetorical questions.

Peter: OK. Thank you. Sounds good.

Karl: Our per capita productivity is huge. Of the last sixteen quarters, I think thirteen have been growth quarters measured by GDP. And it’s causing a rumble in a couple of areas. One is that the Boomers who delayed retirement because of the crash of 2008 when their 401(k)’s became 201(k)’s.

Peter: Or just K’s.

Karl: Yeah, stock markets are back up. So, they are itching to get to a beach with a beverage and they have not told their employers this. Second, we’ve got the issue of high performers. Normally high performers are a fairly mobile group. After the crash in 2008, they kind of hunkered down in place and gripped their chairs and were working scared which always drives productivity up for a while. And we’re to the point where that’s stopping—the growth of productivity I mean. And also we’re getting where the high performers are sticking their heads out of the foxholes and looking around for their next move. So, if you’re a CPA firm, if you’re a finance department, you should expect a significant migration of people in the next 18 months. And you have a choice: they can migrate to you or they can migrate from you. The migration’s gonna happen. And high performers like to work with high performers in an entrepreneurial environment. And you have probably til the end of 2016 to figure out your management style so that you can attract them. Question: are your high performers on LinkedIn? Sure.

Peter: Of course they are.

Karl: In 2008, LinkedIn wasn’t nearly the power that it is now. So, here’s how it’s going to play out. Your high quality person, who you have been giving free reign and not interacting with that much because you don’t want to micromanage them, they’re sitting at home on a Sunday night, binge-watching something. And up pops a LinkedIn invitation for a job for someone else. And they like you, they like working for you, but you haven’t really talked to them in eighteen months because you’ve been of the mistaken opinion that high performers don’t want to be bugged. No, they want to be challenged. They want to be given stretch assignments. They want a good relationship with a boss they respect. So, you know, their departure will surprise you. “Weren’t you happy here?” Yeah, but it was more than that. And so they’ll always just roll their eyes and tell you it was the money, when it’s not the money. Overlaying this, we’ve got a few generational things. So, I’ve got that basic, scary foundation set. Let me drill into one of the interesting topics that’s somewhat driving this.

Peter: OK, before you get into that topic, you mentioned something about LinkedIn. And LinkedIn has just recently launched LinkedIn ProFinder. Have you heard about this?

Karl: Oh sure. They tried to sell it to me.

Peter: And it’s a free service right now that’s out there. But it’s really about entrepreneurship. It’s about who can give me some legal advice, who can do some coaching for me. They haven’t monetized it yet.

Karl: Oh, they will.

Peter: Yeah they will. They’re very upfront about it. But it’s another platform that entrepreneurs should go to to seek assignments.

Karl: Right. Also, understand that LinkedIn’s core business model and cash flow source is not from the advertisements but is from selling direct access to the data base to recruiters. So, they are first and foremost a tool for professional recruiters to use, to get at your best people. Just be aware of it. That’s where their core business model is, was, and will come for. Also, understand that I’m occasionally teaching courses on career transition. And the question has come up several times, “Why are we even doing resumes?” And I say, “Well, it’s a good way to get you focused and then the contents of your resume get copied and pasted into your LinkedIn profile. And then with a LinkedIn profile we will add some SEO, nice stuff. We will add some video clips. We will add to it to make it more of a brochure on your life and career. But the core of a resume is evolving into a LinkedIn profile.”

Peter: My wife, who was with Macy’s for thirty-five years, retired. She took a year off. She’s now trying to look for another job and had to write a resume for the first time in thirty-five years. She’s doing outplacement through Lee Hecht Harrison, and she’s had to do a resume and also do her LinkedIn profile. And it’s been interesting, watching her put this all together and learning more about, as you were saying, the SEOs and really, LinkedIn is your resume.

Karl: That’s right. And I personally have built a web page. If you type in my name, it’s gonna pop up, karlalrichis.com, which is gonna get redirected to a couple different pages I have. As we emerge into this new world, there’s two kinds of people now. There are digital natives, and there are digital immigrants. It’s pretty self-explanatory, and it is not age specific. I work with a guy who’s in his thirties, who is hoping he never has to learn another cell phone beyond his BlackBerry. I’ve worked with seventy year olds who have their wireless Bluetooth hearing aids tied to their iPhone, with the frequency response charts for their hearing aid on their Apple Watch.

Peter: Nice.

Karl: I said, “What’s next?” He said, “I want my pacemaker controls on my watch too.” One thing about the generations, take it with a grain of salt. And second, start looking for other ways to divide the world. And I think a good way to look at it are digital natives versus digital immigrants because that’s the world we play in. We need to be working with people who line up with their jobs. Someone who’s a digital immigrant needs to have a job that doesn’t need a lot of digital interaction. They’re out there, you just need to know where to look.

Peter: Right.

Karl: Quick pop quiz—I want to test our audience. Everybody out there in radio land, have you checked your phone already while I’ve been talking? Do you Google for information twenty times a day? Do you use your mobile phone for more than ten things, ten apps? And here’s a good one, have you turned over remembering to technology? The more of these you say yes, the more you are a Millennial. And understand that with the recent data, it’s kind of funny. Gen X is probably the most important generation because they’re the ones on deck to take over management roles. But no one will talk about them. One, because they’re somewhat quiet and now, because Millennials are the largest generation in the work force. That’s new this year. Gen Xers had two and a half years in the sun where they were the largest. Millennials have taken over. Sorry about that. They’re the most diverse population ever but the interesting statistic is the scary thing on the horizon. Deloitte did a survey, just released, where they asked for future employment trends with the Millennials. Two-thirds of the people currently working for you, whoever you are out there, two-thirds of them do not intend to be with you within 5 years. They are just passing through. This changes everything. This changes how we train. This changes how we manage, because we can’t threaten them to make them Boomers. We have to adapt the very work we do to fit a more project thinking pattern, project employment lifestyle, where their possibility of returning to you in three years, is actually pretty good—if you’re a good place to work. But they’re gonna come back with more skills, so you will have to pay them more. That’s just part of the equation, but that fits the business plan, that’s OK. But, job hopping is going to be rampant, and it’s going to be systemic, and it’s just how we’re going to do work. Good news, it means your organization can be very flexible. Bad news, it means your training and management styles need to change.

Peter: What could stop this revolving door? If an organization wants to say, “You know what, I don’t want this revolving door here.” How do we stop it? Or how do we slow it down?

Karl: OK. Let’s agree that high performers want to work with people smarter than themselves. They want to build their tool kits, they want to work with other high performers. A big key to this is raising our standards on hiring significantly and changing what we hire for, so that the high performers you have are pleased and impressed with the quality of the people coming in to work with them. They’ll stick around if they are working in an environment they perceive they can’t get anywhere else. And if their manager appears to listen to them, then they will stay longer because they don’t get that very often. And they will stay there, 10, 20, 30% longer, for no improvement in money. This is not a money score, this is a psychological satisfier. I mean Peter, have you ever worked longer at a job because you either, A. had a good boss, or B. had a good culture, and that held you even though you could get more money across the street?

Peter: Yes.

Karl: There. Thank you for answering correctly. And I’ve taken jobs for the wrong reason. I’ve taken jobs for money and not been a values fit. I knew within two weeks that I made a mistake.

Peter: I knew within two days.

Karl: Oh man. I worked for corporate sponsored placement for years as an HR person. You said your wife’s going through Lee Hecht. Excellent firm. I was across the street at Right Management Consultants. I was part of thousands of termination meetings. I would routinely ask people, “Was this a surprise?” “No.” And then I would ask, “If this job wasn’t a fit, how long were you here too long?” Average answer, probably three years. Wow. So, somebody would actually burn off three years of their life because of inertia, because of whatever, because of fear of change. I vowed to never do that. So, when I got into a spot where I knew I wasn’t a fit, I started working immediately on my departure and finding a place that aligned with my values. Eighteen months later, I walked into my boss’s office and said, “Can we date other people and still be friends?”

Peter: Well at least you were trying to still be friends.

Karl: That’s right, and we are. It’s important, because of the nature of the business world, to always arrive on good terms, be there on good terms, and leave on good terms.

Peter: Exactly.

Karl: So let’s get back to a couple surprises that I really wanted to cover.

Peter: OK.

Karl: One was that the Millennials are over, that if you hire somebody—it’s 2016—if you hire somebody who is twenty-one or younger, they are not a Millennial. And each generation has a trigger point that defines the generation. With the Boomers it was the size of their cohort. With the Gen Xers, it was that they were latchkey kids and became adults in high school. With Millennials, it’s the fact that they were somewhat over-parented. Let’s call this new group, let’s call them Gen Wi-Fi. You become aware at about age three. They first became aware the year that Google was created. So therefore, they have never known a world where they have to know anything because all of the wisdom since Plato is available instantly on their smartphone. Peter: OK. So, you’ve just basically described my son at turning sixteen in June, of Generation Wi-Fi.

Karl: Yep. And quick, what’s the capital of South Dakota? They don’t care.

Peter: Is it Bismarck?

Karl: No. Get out. It’s Pierre. I just picked that one cause no one knows it.

Peter: Or Peter for short.

Karl: Thank you very much. It’s all about you. Here’s what really makes them scary: the Josephson Institute of Ethics went in and did confidential surveys on ethics of high school kids. Question, have you cheated on an exam at least once in the past year? It was hitting 60-70% yes.

Peter: Wow.

Karl: In the real world people do what they have to do to win, even if others consider it cheating? It’s like 55%, yes. These will be our new hires. So, if we agree that they come into the workplace expecting us to become their parents, we are going to have to do the job their parents didn’t do on teaching them ethics. Because, I don’t care what your organization does. If you have workers that are willing to, “Oh, its late, and I’m out of here. And instead of doing a full lab check on all of these chemicals, I’m just going to enter a good number that they probably are.” That’s an ethical lapse. I’m not going to leave my workplace clean and ready for the next person, so it’s a safety hazard. Safety is an ethical thinking. We have ethics as one of the fundamental cornerstones of commerce and without ethics our society falls apart. And without trust in each other, our society falls apart. For a variety of reasons, ethics are going to be stretched thin starting, oh about now. Where’s this coming from? I’m not sure. Certainly politics plays a role, certainly sports plays a role. I was a big Lance Armstrong fan.

Peter: Oh, yeah. Me too.

Karl: Does Major League Baseball condone performance enhancing drugs, yes or no?

Peter: They say no.

Karl: Yeah, right. Are there steroids users being admitted into the Hall of Fame?

Peter: Ah yes, but we don’t know that the worst of them—

Karl: yeah, yeah, yeah, yeah, OK. Right.

Peter: What about deflated balls, footballs?

Karl: I couldn’t believe it, I have to tell this story briefly. So, there I was—I wish you could have been there—I was the opening speaker at the annual meeting of the Vermont CPA association, two days after the Deflategate sanctions had been announced. So, if you’re in Vermont, who are you cheering for in the National Football League?

Peter: Patriots.

Karl: There were some Buffalo people in the audience but mostly it was a Patriots crowd, and they were cranky. My nametag read Indianapolis, which is where I live. So, I decided to go straight to the heart of the matter and trigger an ethics discussion. My first slide up on the screen was like an engagement picture—a young couple, happy and about to embrace—and they were both wearing Tom Brady jerseys. And my opening statement was, “Welcome. A moment of advice before we get started: when you marry, marry a Patriots fan because they don’t mind if you cheat.” They were off and running. You know it’s interesting, everybody has a hot button on ethics. “I never break any rules.” OK, tell me about your driving. The speed limit’s 65 what do you drive?

Peter: 75.

Karl: Everybody does that. So, ethics is an art. Here’s my point: on this coming storm cloud, as their employers—I’m talking HR here—we need to include in the core culture of the company the material that attracts someone to our firm, the onboarding that happens once they join our firm, all of that has to have an undercurrent of high ethical standards. What does it look like? Give me some case studies, we need to be able to teach people ethics and continually teach people ethics. If you’ve ever worked in manufacturing, every shift of good organizations starts with a shift meeting. At the shift meeting, it starts with a safety moment, where someone tells a safety story, somebody does a safety briefing, but safety is the common topic in manufacturing and has been for decades. We need to do that same thing with ethics inside our organizations, where a managers meeting will begin with an ethics moment, where onboarding begins with a quick chat of, “This is our ethical standard.” Not only is it just good for commerce, but remember we were talking about high performers earlier?

Peter: Right.

Karl: They love working in an ethical environment and low performers hate an ethical environment. So, I guess one of my key points is, if you really want to get ahead of this coming ethics storm, bake it into everything you do. And make integrity a part of the screening for new hires, you know, build in a question: “At work can you give me an example of a time when someone around you acted unethically and what did you do, or what did you learn from it?” Let’s really have this as part of the conversation, right up front, so people understand what’s going on.

Peter: I agree with that. If you want to have an ethical environment—you know Enron had a code of conduct. They tried to create, on paper, an ethical environment. But they never walked the talk. So the tone comes from the top and I love the idea of starting meetings with an ethical conversation. I don’t know if we can teach people ethics.

Karl: Oh, yes we can.

Peter: I don’t know. I tend to think that was taught at a young age. But we can bring them into different types of ethical situations so they can contemplate their personal stance versus what’s going on and try and change that behavior.

Karl: Two things. First off, understand in the human condition, we go through three basic stages in the development of our personal ethical standards. When we’re kids, we do the right thing to avoid punishment or to gain a reward. When we get to young adult hood, we join a group and we share a common ethical standard. We’re watching the ethics of others and mimicking them. The group will drive the ethics. It’s kind of mob behavior on ethics, either doing something good like after a tornado blows through, everybody in the community goes into an abandoned convenient store where it’s unlocked and they shop and leave their cash on the counter. That was documented after Hurricane Katrina in small towns. Then there’s the final stage, where you have your own ethical standards which you stick to no matter what’s happening around you. Case in point, if you’ve ever served on a jury, there was someone in the room who was making decisions on their own standard. That’s why we have juries. That’s great. That’s why if it’s a really capital offense we have to have unanimity, because if there’s one person in the room who will not do it, fine. That’s our society functioning. But that’s somebody who is adult, having their own ethical standards. And what we’re trying to do is get people up to those standards. Without it, we’re gonna see a surge in embezzlements, we’re gonna see a surge in bad decisions. This is what we have to protect in our society.

Peter: OK.

Karl: If you’re trying to teach somebody this, give them a list of a half a dozen things that could be great aspirations: wealth, fame, knowledge, integrity, popularity. OK. And say, “Pick one. You can only pick one of these, but when they’re writing your eulogy, this is what you will be known for.” If they pick anything except integrity, there will be many times in their lives that they give up integrity to get the other thing.

Peter: Right, I agree.

Karl: They need to be aware of this. What drives it? Greed for money.

Peter: Yep, greed.

Karl: But we need to be comfortable giving people case studies. You know, you find a wallet on the street. What do you do? You’re in a grocery store and there’s a lady standing in the corner of the deli section opening and eating cheese food sticks, like nobody’s business. She’s clearly not going to pay for them. What do you do? Well, imperative principles say, I turn her in because it’s steeling. Now she reveals that she’s pregnant and homeless and she doesn’t want her child to get the same start she did. Now what do you do? Oh, that’s more difficult. Exactly. That’s why we have to get people square on steps in ethical decision making before they’re faced with a tough challenge. Peter: OK. So, what would you do in that situation? You witness this person?

Karl: Oh, I’d buy her some cheese sticks. And, on one hand—ha ha I love it—one one hand, I feel like Tevye in Fiddler. On one hand, the imperative principle is do what is according to absolute moral rules. This is like when judges got sentencing tables and could not deviate from them. And then there’s the utilitarian principle: do what produces the greatest good. And this is very situational. But this is why it’s the art of ethics and not the science of ethics. Remember when I said there were three stages? OK. People have to have developed their adult sense of ethics, so they apply the correct principle at the correct time. They have tools in their toolbox. Case in point. Peter, you’re running a firm and one of your best data entry worker bees—this is one of your best ones—turns out does not have a full four year degree as claimed on her resume when you hired her six years ago. Doesn’t have it. Got a two year degree. She lied on her application form. That is a fireable offense. What do you do?

Peter: I fire her.

Karl: I would say, this is one of your best people, OK. This is where you could also consider sitting her down and saying, “Listen, do you agree what you did was wrong? Are you willing to get the degree starting now and complete what you said you didn’t have? Because her six years of excellent performance and great behavior and being a part of a team, does earn her something, does it not? Peter: Yes, and she lied. So, maybe I need to go back and look at past performance and maybe I was not seeing everything clearly.

Karl: See how tough this is? This is not simple. It also means that we need to be really aggressive in our screening of people on the way in. This circles back to something I said a little while ago. We need to get better at our hiring process. I made my case of what’s going wrong. Well, what can we do to fix it? We can become better managers, we can become better listeners, we can hire for values, and train them in the skills and really be a good ethical example.

Peter: As one of my podcast interviews, Karen Young said, “Hire slow, fire fast.” First thing she asks an applicant is to go look at their core values, mission statement, and vision statement. How do you fit into this environment? How do you fit into these core competencies? And based off of that decision, or based off of that conversation, comes the next. Well either you’re gonna get an application or you’re not a good fit. And she said her hiring practices have gotten 1000% better, flipping it that way versus you don’t see the mission, vision, and core competencies until you’re signing your paper work on day one. Karl: I agree with two things. Well, I agree with one thing and disagree with another. I agree with the higher standards. I disagree that you can ever have anything over 100%, so there. Peter: Well, you never have anything over 100% but—

Karl: Well you just said 1000% percent, smarty pants.

Peter: Did I say a thousand?

Karl: Yes you did. Roll back your tape up and you are busted.

Peter: I’m busted.

Karl: I paid attention in statistics class, clearly…

Peter: Can you spell statistics?

Karl: No.

Peter: OK.

Karl: Ha, ha, ha, ha.

Peter: So, what else are you seeing out there?

Karl: I’m seeing people desperate for simplicity. I’m seeing everybody from the top down hoping that they could have a simple answer for a complex problem. I attended a presentation yesterday by a statistician who said he ground through the basic numbers, and the average human brain is confronted with 32 gigabytes of data a day. In different forms, in different ways, everything from an Excel spreadsheet to how soon your Uber driver is picking you up. Our brains are having to process far more data than they were built for. And there is a hunger for simplicity. And something that anyone can take from our discussion is, I’ve tried to take a couple of complex, difficult things, first off, give you some warning that they’re heading our way. Second, I’ve tried to simplify what they are so you’re not overwhelmed by, “I’m not gonna pay any attention to this because it’s too much going on.” And third, I tried to give you a simple answer. And understand that, to all the people who are listening to this, everyone who is watching you and following you and a part of your life, they are hoping that you can simplify the complex, to clarify the things that are obscure, to make it understandable. And that is the most important human skill going forward. To take complex things and make them understandable.

Peter: OK. Let’s take that point right there. And let’s talk about the accounting profession. You’ve got very complex standards, complex code sections.

Karl: Oh, yeah. The Tax Simplification Act could have been called the Tax Accountant Lifetime Employment Act. Peter: But how do you take, if you’re sitting across, when the accountant says depreciation, the person who’s the non-accountant sits there and thinks, “Well, that’s the value that I lose in my car when I drive it off the new car lot.” And the accountant goes, “No, no, no. It’s a systematic allocation of an asset over time.”

Karl: Meh, meh, meh, meh, meh, meh, meh, meh.

Peter: Aroogah. Karl: Yeah, ruh roh.

Peter: Ruh roh, exactly. This is something I talk about a lot. How do you take complex information and make it simple?

Karl: You do it with careful communication at a careful speed. Notice how I slowed down there? This was an important point and so I altered how I was delivering it so that the person listening would go, “Oh man. He slowed down. This must be important.” If it was really important I’d repeat it. I’d repeat it. It’s a question of really getting good at communication skills and then really understanding both our subject, in this case depreciation, and our audience. What language do they speak? Then you have a hope. For instance, I should explain, I am a licensed insurance agent I work in an insurance agency as an HR person. I am the first person many people have met who has actually read all of the Affordable Care Act, and studied if for years. So…

Peter: And?

Karl: I can explain. I can call up a CFO and leave a voicemail that says, “Hey, if you call me back I can explain the Affordable Care Act in thirty seconds.” Click. And then I get a call back from an unknown number and a voice on the other end says, “Go.” And I give a basic 35,000 foot explanation in twenty-five seconds. And that earns me two minutes. And that earns me a cup of coffee. Because if you truly understand a subject, then you can explain it simply. If you don’t understand a subject, all you’ve got is all the details that you can recite.

Peter: OK. So, for the sake of the audience, go.

Karl: So, insurance works best if everybody is in the pool sharing. The Affordable Care Act does two basic things. It gives, through the exchanges, it gives existing insurance companies ten million new customers, most of whom are healthy. For that the insurance companies have to take them all, no carve outs, no preexisting conditions. And it basically just affects 25% of the population without insurance. And that’s the indigent and poor, with the expansion of Medicaid, the young invincibles who don’t think they need it, and early retirees with a chronic condition too young for Medicare. Beep. Peter: Bingo, you’ve got it guys.

Karl: And then someone will say, “But what about…” OK. We can talk about that, but everything in the whole act fits in the umbrella.

Peter: I will give people your contact information after this, but you did it.

Karl: Oh, sure.

Peter: But you did it, I wasn’t actually timing it.

Karl: That was probably a little long. I threw in a few flourishes because I’m with the famous Peter Margarita.

Peter: Yeah right.

Karl: Yeah, so get really expert, then understand who you’re talking to, then become a good communicator in their language.

Peter: That’s exactly right. And put things in context that everybody understands or the person would understand. I was doing a presentation, and one of the topics that I talked about was consolidation of variable interest entities.

Karl: ZZZZZZZ.

Peter: Exactly, and I had 250 CPAs in the audience. Now they should know this, but it’s a different language, so I found a way to put it in context. I start off my presentation by asking, “How many in this room are married?” And all these hands went up in the air. And then I said, “How many of you have a mother-in-law.” And all these hands are still up in the air. And I said, “I want you to think of your mother-in-law as a variable interest entity, and your spouse wants their mother to move in, consolidate, into your household.” I went from a completely unengaged audience, to an audience that was leaning forward.

Karl: That was a visceral reaction, I am sure.

Peter: Oh, it was great. And I know I have a pretty cool name, but every time I go back to Arizona, I’m the mother-in-law guy, which means I was successful.

Karl: People still remember that story.

Peter: People still remember that story and how I put it into a different context.

Karl: You know, that’s an interesting point. We all need to become better story tellers. I read a Psychology Today article, don’t know how many years ago it was, that made the point that, you judge the intelligence of someone you just met by their ability to select an interesting short story and tell it in an engaging way, in a fairly quick period of time. A conversation is nothing but a chain of short stories being lobbed back and forth like a tennis match and we like people who tell stories in a concise, engaging, pleasant way. So, if you were to circle back to what you asked me a few minutes ago, what does it take to get a better communications job done? I think I should have said storytelling.

Peter: Story telling’s huge, the ability to tell stories versus pummeling your audience with facts and data and numbers. If you can take those facts, those data, those numbers and transform it into some sort of story, the likelihood of someone walking out, retaining that knowledge has dramatically increased.

Karl: Yep, that’s exactly right.

Peter: But it’s hard to do. It’s not easy.

Karl: Hey, if it was easy, simple people would do it.

Peter: Exactly, so I’m watching you, you’re looking like you’re looking for more rainclouds out there.

Karl: No, I’m thinking we hit all the major points I wanted to cover and want to kind of summarize what the most important thing people can do is.

Peter: Alright, let’s have it my friend.

Karl: It’s to really focus on the information that you’re good at and that you really need, instead of all the data smog, the 32 gigabytes. We really have to pay attention to the new ones coming into our organization because if we don’t screen and hire them better, they are going to destroy the conventional structure that you’ve built in a high performing culture. So, we’ve got to pay attention, we’ve got to raise our hiring standards and change how we do things. And then finally screen for, teach, and practice ourselves, higher ethical standards. There was an author, John Bronn, who said, “Ethics is learned by modeling, not by reading a bunch of books over the weekend.”

Peter: Well put.

Karl: And there you go.

Peter: I think that another one, the last part that we were talking about from a takeaway, is try and find ways to become better communicators. You know when, I talk to CPAs, accounting is the language of business. We have to become better translators. We have to translate our business into something that somebody else understands.

Karl: Yeah, that’s exactly right. Where did you learn your communication skills from Peter?

Peter: I grew up in a Greek household. I’m Greek-American. I’ve spent most of my young life and through college and even after college in a restaurant, in customer service. So, I’ve been around a variety of different situations. And I’ve also got the gift of gab and especially the humor from my father who was an entrepreneur, who did not work in an office. So, I’m constantly working on it. It’s something that, some people think they can master—I don’t. I wanna just continue to get better.

Karl: Yeah. I’m always looking for new resources. A just released book, I met with the author yesterday, the book’s title, one word, Everydata. It’s got a website, everydatabook.com. I spent some time with John Johnson, PHD president, CEO, blah, blah, blah—the guy that wrote it. He gets it. And his last chapter on how to communicate complex data is brilliant. A lot of the first chapters everybody will already get but the last chapters on how to fix it are really well put together. Peter: Well that’s great because I will be buying his book here in the very near future and we’ll have the information about the book and the website in the show notes and the transcripts for everybody to find it.

Karl: Actually Peter, you should reach out to him and see if he’d do a podcast. I was impressed with him.

Peter: My friend, we think a lot alike in a lot of ways. And I was thinking the exact same thing that I’m gonna see if I can get him on my podcast.

Karl: Great.

Peter: Well Karl, as always I enjoy our conversations. I can’t begin to thank you enough for parting your wisdom and taking the time to spend with me and my audience. And I know that they’ll walk away with something today that they will begin to apply or begin to think about or begin to recognize. Maybe it will make their life a little easier around the office, around the house. Karl: Hey, I want them to be sustainable. That’s the new term I’m looking for. Not to survive but to sustain.

Peter: To sustain. Well once again, thank you my friend and we’ll talk soon.

Karl: You bet.

Peter: Thank you.

Pete: I’m so excited today, I have an opportunity to speak with Ed Mendlowitz part of WithumSmith and Brown. As you heard in the intro how we met and actually this is the first conversation we are having since connecting many years ago on LinkedIn. First and foremost, Ed, thank you for taking time and thank you for participating in this podcast. I know that you’ll bring a lot of wisdom nuggets and wealth of knowledge that my audience will be able to use so I thank you. I greatly appreciate you and welcome to the show.

Ed: Hi Pete. Nice to meet you.

Pete: Thank you very much and nice to have you here. Ed, why don’t we start off by you just giving, telling the audience a little bit about yourself.

Ed: One of my favorite subjects. Basically, I think that I am the least of the expert generalist. Right now everybody is specializes, everything is a specialization, niches, leadership in different specific fields. I started out a long time ago and I figured out that the only way I could grow and build this small practice was if I never turned down business. So whatever came my way I set I would do. I literally have done, I can’t say did everything that it counts but I think I’ve done as much of what accounts to as anybody.

I certainly am a note to tax expert. I testified at congress. I’ve written quite a few books on taxes. I’ve been a team captain doing peer reviews of CPA firms. I got every accreditation at the AICPA in South. Take about 140 credits a year. People think about taking CPA I love taking CPA because I meet great people. I learn new things and expands my knowledge. I do business evaluations, forensic work. I had a small firm. We did the lowest level work that CPA’s could do. Which I would say is Quickbooks consulting and we did the highest level of CPA skill which is for the companies and we are partly SCC practice section at that time. My range is great, it’s wide. I’ve been very good at training people. So once I developed an expertise, I would have one of my people CF become an expert in that area. And then I would stop doing it and the I’m going to the next thing. So I have a very interesting career, I still do.

I enjoy myself, like everything I do. Monday is the best day of the week because I look forward to five full days of work. Friday is a downer because I have to stop working for a couple of days. We merged in with WithumSmith and Brown 11 years ago and it was 14 people in my firm. It was three partners; it was me and two other partners. We have everyone of the 11 staff we hired and trained. Nobody came to us very experienced in what they were doing. It includes the accountants, the bookkeeper, the administrator personnel and the marketing person. I’ve become very good at training and a very successful, one of the reason I’ve become successful is I get people to do my work. I get them to do it my way and so I’ve been an entrepreneur in accounting. Started to practice one of the guy 14 years later, we had the third partner. We had 50 people.

Pete: Wow.

Ed: Working for us. I left it from the small firm which is when I merged in with Withum 11 years ago. That’s the short version of my background.

Pete: It’s an exciting background and you are a part of WithumSmith and Brown, my first introduction to your firm was through Youtube. With the videos that you guys do, stated the firm and I will have to say my jaw dropped the first time I saw it. A very progressive, a very out of the box, non-traditional accounting perspective and I do believe I spotted you in State of the Firm 2014 it was that you were part of that video shoot. Is that true?

Ed: Yes, I was in all the video, except I was not in the last one because the list before that I was there. I didn’t take a prominent role. I was there but you couldn’t see me. And the last one, I figured my time has come not to be in it but a bunch of people where in it. It’s an amazing thing [Sarah ?? 5:10] runs a social media. She actually post my blogs. Whatever I write, I say fire and she posts it and gets it out there and tweets it and all the social media stuff. But I tell you the videos, one of the things that came out of the video which I think may have been consequence has become a tremendous vehicle recruiting younger people.

Pete: Oh by far.

Ed: We did it to introduce our firm. To excite our staff. To try establish and landing get clients and has become unbelievably valuable in attracting staff. People call us, good people. We hire a lot of people. My office alone, the forensic office, we hire at least seven or eight people every year out of school. And then we have about a dozen interns throughout the year. There are times working in our office. We used to recruit to get them and now a lot of people call us. This thing is great.

Pete: My impression of it when I first came upon it, it was there for a recruiting tool. That’s what I thought. In all honesty, the first time I saw the video, after I picked my jaw up because it was outstanding, so different. It was so fresh. It had that feel that you were trying to attract those students coming out of school. The younger Gen Y’s group. I think I was 53 at that time when I saw it and I went, “ Am I too old?” to go back to work and pop it in the can because that excited me. There was just excitement in that video that it just really resonated with me that to me, I interpreted it this is the way the profession is changing in a way. Versus it wasn’t the old hardwood type of look to it. For those of you in the audience, go out to Youtube and Google WithumSmith and Brown or directly to their website and you can see these videos. From a 100% partner firm, it’s pretty impressive.

Ed: Thank you. I think the original, I wasn’t in the planning but we have a stated a firm meeting every year at the beginning of January. Everybody comes, in fact this January we just merged in a Florida firm with a 110 people and over a 100 people flow in from Florida to attend our State of the Firm meeting in January. So we got to meet a lot of partners and staff. But I think the main emphasis was to excite our staff. We hire people and we wine and dine to get people to work for us and then sometimes treat them good and same thing with clients. A lot of accounting firms they go out of the way, they’d do anything to get in the client. They’ll leave the meeting, they’ll leave the kid’s softball game, if they had a meeting with a new client they would do that but they don’t pay attention to their existing clients. If they paid attention to the existing clients the same way with the same effort and interest to get a new client. They will get a lot more business from existing clients and the firm will grow and the existing clients will do all the recommending. Referrals to them. So offering bidders and we continuously do it because we have a lot of inhouse programs that are really great. We have [shell/shared 8:55]stock program. Staff could actually own fathom stock in Withum and sharing the growth of it. I think that we wanted to excite our staff and I guess exciting staff is exciting young people and it leads to recruiting. In the first video, you can see me dancing on the table.

Pete: I’m gonna pull that up after we’re done.

Ed: I was [inaudible 9:23] wearing but you can see me.

Pete: That’s great because when I’m hearing you talk about as we have to take care of our people. There are two types of people. Our staff and our clients. I say this in a lot of the presentations I do especially at conferences when I have a crowd there. I’ll ask the query- What business they are in? I hear consulting, I hear tax serves, I hear auditing, hear this that and I don’t- – No that’s a byproduct of what you do. That’s a byproduct of your business. And then I get them a little uncomfortable. Then I go, it’s really simple people, you’re in the people business without people you have no business. It’s amazing that the looks I get, for some it’s the Aha moment and I think we need to take a look at our people. Sometimes we don’t treat them well. Sometimes we don’t treat our clients well that causes the high turnover. That causes clients to leave and maybe a little bit more paying attention to the needs and wants of our clients as your firm is demonstrating we’ll help with growth.

Ed: Let me tell you something about our firm. I’m very interested in the profession. Of course I’ve been very involved in the profession long time. When people leave our firm and some people leave because they’re not happy here. Almost every single person that moves gets a job in another CPA firm. I would say much more than half of the people who leave our firm get jobs on another CPA firms. Take the big four for example, the big four hire 70% of the accounting majors when they graduate college.

Pete: Okay.

Ed: In three years, 90% of those people leave the profession. They don’t leave the big four firm to go on another big four firm or they go to a firm like us, a couple do. But they basically leave the profession. The people who work for our firm stay in the profession. I think that says a lot about the firm. I think there’s a lot of firm our size in the area. I know media or anything across the country. Firms outsize the people seem to get jobs to other CPA firms and stay in the profession. While the real big firms, they don’t and of course the very small firms some do and some don’t but I can’t tell you what my experience was when people left me. Because when I have my practice, nobody quit.

Pete: Well there’s a lot of people – –

Ed: A lot of people move and they took jobs in other CPA firms but nobody quit when they work for me. And I wasn’t the nicest guy in the world to be honest with you, but nobody quit. Because they were learning every minute of the time. They were excited. They like the clients they worked on. They like the people they work with and I was just [inaudible 12:30] You don’t have to like your parent to have a nice house.

Pete: That’s very well said. One more time, that’s just respect. I talk a lot about that in my book that you don’t have to like the person but you have to have respect for the person in order to keep things moving forward. Once we lose respect, things begin to fall apart within business transactions, within staff, within everything. I may not like the person but as long as I get some respect and I show them that respect things will continue to grow. People will not leave. We will continue to retain those individuals because it is, all about the people.

Ed: That’s right.

Pete: And you made a comment earlier that I want to circle back to about your love of CPA of continuing education and you get a 140? Was it 140? 110? Something like-

Ed: Certainly over a 100 credits. Yeah, I need to keep up my certifications.

Pete: True. But you made a comment about one of the things you liked about going to CPA courses were the people that you meet.

Ed: Yes.

Pete: And I do over close to 70 programs a year and one of the first things I start my class of with is – Does anybody in the room know each other? They said, “No”. And I said, “Hope you got your business cards because this is one of the best place to network is in the CPA Event”. I guess some people look at me like I’m crazy and others will take me up on it and will meet somebody new or whatever. But I think that’s one of the best places to network is within CP because we have to take it.

Ed: Well, I have met people from all over the world. I regularly correspond and I’ve gotten referrals from somebody I met from Australia at a CPA conference. I have this thing called the partners network. I’m not pushing it. It’s merely more people who are local but I send out a lot of materials. I send out 55 free checklist beginning of every tax season. I have a Q&A that I post. I answered people’s questions. They are practice management questions but most of my referrals come from CPA’s and we’ve built our practice, I built my former practice, with referrals from CPA’s. I did the peer reviews, that is a way of meeting CPA’s and I became their expert in certain areas and things they couldn’t do, they would refer to me. But I really meet people all over the world, all over the country when I go to CPA programs. There are certain people that I see once a year at these programs. We go out to dinner. We hang out and I would say that I never really meet less than 40 or 50 people. I mean meet them. I don’t just say hello and give the business card because you’re there for three days I met an AICPA personal forensic planning conference. This is evaluation conference. I was spending three days with people.

I also find thumb with a crowd of people if I met some people that they’re alone, I invite them to join us. Actually, this past November, we were in Vegas at an AICPA conference. I was with some of my partners and staff and we met somebody from Nashville. She was there alone so we invited her to dinner with us. Well, it turns out that this conference this year is going to be in Nashville. So we now have a friend in Nashville that we will meet and go spend some time with. Accountants are nice people. We’re very cooperative. We respect each other. We call each other. We have questions. Sometimes, I get a referral for somebody in Texas, Houston or something. I work at my list and see who I know and I could give a couple of names to people. It’s a way of helping them and helping the person that needs the referral. The bottom line is oh yeah, people take this virtual courses and I’ve taken some and I sit in my office. I sit on my desk. Sometimes, I’m sitting in my underwear at home taking a CPA course but you miss that personal contact. I was at a course Friday, a whole day CPA program on Friday on sustainability. Actually, I was one of the speakers. They have like 15 speakers and then in the course of that program, I suddenly spoke to 30 or 40 people. I had lunch with one of the young lady who is writing an article for National Magazine. So, now I met a reporter and she followed up already and I’ll keep in touch with her. It could lead to me getting quoted in some other publications.

Nothing beats the touchy feeling. I think in servicing clients, we don’t understand that either. We think that we do the tax return great. We get the tax return done on time. We set in a staff person occasionally. We think that’s developing relationship. It’s not. It’s when the partner picks up the phone and calls the client. You don’t send an email and say, “how are you?” Although, I do send emails on people’s birthdays because I figure out that sometimes I don’t want to talk to people all the time. I’ve sent articles to people. You try to maintain a personal touch. If I’m in an area where I have a client, when I’m meeting somebody and have another client in that area, I just pop in. If they’re there, I say hello to them for 10 minutes. If they’re not there, I say, “well, just tell John I was here, I was in the neighborhood.” I want to create availability. Clients don’t care. I think I’m great but clients don’t care if I’m great. They don’t know if I’m great. They think I’m great but what they really like is that I’m available. I returned their phone calls. If there’s a problem, I’m in there and face with it and I precipitate phone calls. I call them with questions, with suggestions. You don’t have to do it more than four or five times a year and they think you’re fantastic. The way you could measure this is very simple. If you get referrals from existing clients, you’re doing a good job in the relationship to partner. If you’re not getting referrals, you may never lose the client because 25 years ago, you help them with their divorce and they’ll never leave you but they stop referring you because you could sit down but they don’t want to recommend you becuase they don’t want to subject somebody else maybe to something that they don’t like about you but won’t drop you. So, the referrals you get from existing clients is the way that you could determine if you’re doing a good job or not.

Pete: I think of myself as one of my strong suits is a networker. I love networking. I love building those types of relationships. However, I think I’ve just met the person who has networking plus on steroids because you gave me so many good ideas. I mean some things I’ve never thought about like the one with the person who was by themselves and you invited them to dinner. You’re always making connections, building your network because referrals are the best way to grow a business. I’m going to take some of the things that you said that I haven’t done in quite a long time and reinstitute them because that was an excellent demonstration or a way to prove the power of networking and what it can do. I have to say thank you once again. I sent you my book blind. We got together on LinkedIn. I’ve been following you for quite a while through your writings and article posting in Accounting Today and CPA Trendlines. When I sent you the book, I didn’t know if you would even respond with a thank you, which you did but I’m amazed how many times I sent my book out and I don’t hear even a thank you from people. But you went the extra mile and I’m still in awe that and actually wrote a book review of it. I know I’m still a little choppy in talking about it because it just blew me away that someone would take the time who I’ve never met face to face and never had eyeballs on each other. We’re just somewhat met through a virtual world and would do that but then if I remember correctly, one of the reasons why you open my book is because I have three letters behind name, CPA. Then, you read that we have a mutual acquaintance in there, Dr. Gary John Previts, professor at Case Western Reserve University, which also helped in that connection. If you could just tell my audience some of the things that you found in my book that you’ve liked and been able to apply to your daily life.

Ed: Well, first of all, I got the book. I get a lot of books and I always look at them. I don’t always read them but I always look at them.But you mentioned Gary John Previts who right away- You know, by the way, a book I knew Previts is not the highest thing on my list that I would read to be honest with you. But you mentioned Gary and I said, “well, this guy is legitimate,” because Gary is certainly a leader and a champion of accounting history, which I’m a big fan of his. I started looking at the book and then you know what happened, I opened it up to page in the middle. I just opened up something and you were talking about that you say, “instead of saying yes, but. You say yes, and.” I happen to be a very big fan of Benjamin Franklin. He doesn’t know it but I am. When he was younger, he wrote his autobiography, which is still being published today that says a lot about the quality of the book of why people should read it. But he developed the 13-point system of making himself a better person and one of the things that he has in his 13-point system is not saying “yes, but” but in a way saying “yes, and” just like you said. I read what you wrote. It’s just a technique of getting your point across without getting your point across. Helping people buy into your way of thinking being so so argumentative and so [inaudible 24:06]. This book looks good so I read it, I read the book. It’s a short book so that helps. It’s not really about improvisation. It’s not about acting. It’s about communicating. It’s about how do you be a better communicator. You know you mentioned I’m a good networker because I work at it. But I work at it. I put a lot of work. I do crazy things and it’s the personal touch. The personal ability to communicate with people and you don’t have to be a good speaker. You don’t have to have a lot of ideas. Sometimes, you have to be a great listener. You just get people to talk. The more people talk to you, the smarter they think you are. I’m never gonna over impress people of how smart I am if I do all the talking. So this is your book, and it is about taking away. Wise work speak plain just say it the way it is, which I got to I tell you, I write these blogs and the hardest part is to take out the role of fancy words and all the things that I think might impress people because the object is to communicate ideas. If I go write something or if I talk to people or give a speech. People walk away with one or two things that they’re gonna do because what I’ve said I’ve communicated to them. And if they walk away saying, “Boy, this Mendlowitz is brilliant.” I do not communicate because they’re not gonna change their actions. It’s about us, it’s about them. It’s not about the accountant and the firm, it’s about the client and what’s in it for them. And that’s what we’re doing. Your book is a – I don’t want to say textbook because it’s not that scholarly thing that people drudge reading through but it is quick. It is easy. It got short paragraphs. You get right to the point. You got ideas that people could immediately walk away implementing. It’s something that I’ve looked at once again. Since I wrote the article before you contacted me, I looked at it again because you read things then you put aside. If I wanted to get one or two things,which I did. I suddenly implemented that and just add. Even though I knew it, I wasn’t practicing it. I did it. But you said something that’s ingenious and I say this all the time so it make both of us geniuses.

Pete: Okay.

Ed: You said that bad ideas lead to good ideas and no ideas lead to nothing. That is so true. When you are in a committee. When you’re in a group. If you could create an atmosphere what people could just spit out the craziest, stupidest ideas and have a chance of coming up with something good. If you stifle people’s’ ingenuity you stifle the participation. You don’t let them participate, and you’re not getting any ideas and you don’t get any ideas, nothing is going to happen. You mentioned a video, who would think that’s a good idea? It’s a crazy idea. If I taught you about the iPhone, you’ll say it’s the craziest stupid idea. We’re on an iPhone right now. 10 years ago, this damn thing did not exist.

Pete: That’s right.

Ed: And I just got, in the course of this talking to, I got about five calls. This is it! This is how we work, how we live. You know, in December of 1975, I got my first email account.

Pete: Oh wow.

Ed: When you think about it, I remember this December I went to attend a meeting in May hosted by Martin Edelston who founded Bottom Line and the Boardroom Empire. There’s a guy there and he said, “how many people have an email address?” Let’s say there are 20 people at the dinner and I think three people raised their hand. I didn’t know what he was talking about. He said by the end of the year I guarantee everyone of you will be having an email address. I didn’t know what he meant and the day after Christmas in 1995 I signed up for an AOL account. Actually, I signed up for Prodigy account.

Pete: Oh wow.

Ed: The reason I did Prodigy because at that time it was owned by H&R Block [inaudible 29:08 – 29:11] H&R Block’s talking. That didn’t do well and Prodigy is out of business but I still have email. We’re using it. We’re depending on it. Now, they have texting and everything but I like the email. I could actually dictate email on my iPhone. You don’t have to write anything. I was at a golf course yesterday and I got an email. I happened to look at my iPhone, which was stupid. I got an email and I dictated a quick response – I can’t talk now, I’ll call you later. I dictated it so there is some crazy ideas that Columbus discovering America. It was a crazy idea.

Pete: Right.

Ed: When you think about all these things that are going on. Donald Trump becoming the Republican now [inaudible 30:01] was certainly a crazy idea. And every bit of logic that we could imagine would say how he can’t win, especially, given the makeup Republican party and the type of people who voted in the primaries. So, this is your book – bad ideas lead to good ideas. And we got to have ideas. We can’t stifle the participation of people.

Pete: Well said. I can’t agree more. I do a creativity course, How to Dump SALY, and find a new creative way. I have the audience of CPA’s and I ask them this question, how many in this room think they are creative? Usually maybe one or two people. Then I’ll go, let me rephrase that question. How many in this room have ideas? All hands go up, then that means you’re creative. Something’s blocking it from getting it out of your mind, onto paper, out into the form and that’s probably two things. Your inner critic telling you that’s a stupid idea, don’t say it. Or you are in a culture that doesn’t embrace that type of creativity. That might poo-poo that type of freedom of thought. That’s just a crazy idea. We can’t do that here. Right there, you just shut the whole creative process down for that day as well as forever because you get embarrassed on a room. I’m not going to take that type of verbal humiliation in front of my peers when I’m asked for an idea but then I’m told that’s a stupid idea we can’t do that and just moving on. So yes, always bring out your ideas. And how to create a culture. If you’re partner and you’ve got to group the staff and you’re trying to figure out how to increase productivity or profitability, you’ll be the one to throw out the crazy idea. You’ll be the one to throw out that bad idea just so everybody else is “wow, that is kind of a crazy idea”. Set the lead, take charge of it and then sit back and watch the ideas sparkle out from these individuals.

Then yes, we say innovation.I take innovation and break it into two pieces: creativity and innovation. The innovation is taken as effectively applied creativity. That’s when we can bring judgement into it. But thank you for the review and I would like to ask if I think you and I can probably talk for about 2 hours on almost any given topic and I know you’ve delivered a lot of wisdom and knowledge into this 30 minute podcast. I would like to ask permission to contact you again in the near future and conduct another interview with you on a whole different topic and just let that interview grow. I didn’t think we would end up having such a wonderful conversation on networking when we started this. I’d love to get another conversation with you and just kind of organically grow and be pushed in the direction that I don’t think any of us is planning on.

Ed: Sure, this was fun. I enjoyed talking with you. I’m ready anytime.

Pete: That’s great. Once again, thank you Ed. I can’t tell you how much I appreciate you taking the time and I appreciate everything that you’ve done for me and I appreciate everything you’re doing for my audience in helping them maybe changing bad habits and create some new good habits. So, thank you very much and I will be in touch because I do have another conversation with you. So thank you again Ed.

Ed: Thank you Pete, take care.

Pete: Bye.

 

Pete: Tom, thank you for taking time out of your extremely busy schedule to spend a conversation with me on my podcast. I can’t thank you enough and I greatly appreciate it and welcome to Improv is No Joke.

Tom Hood: Pete it’s a honour to be here with you so I am excited to be with you.

Pete: Prior to us recording this Tom is on the road a lot and travels throughout the state of Maryland and as well as nationally in his role as CEO of the Maryland Association of CPA’s and the Business Learning Institute. But he just got back from AICPA’s Spring Council and what can you share from that council meeting that this audience who will contain CPA’s, what can they take away from what you saw at this conference, council meeting, excuse me.

Tom Hood: I think the council meeting really emphasized a couple of key areas which I think are big opportunities or potential disruptions depending upon how you look at them. But certainly the pace, the exponential pace of technology and some of the big changes that that’s bringing was an overarching theme. There were several key speakers that addressed that area. Related to that is the era of big data. So certainly what technology is bringing is the need for analytics on lots and lots of data. So there was a big piece of that. The third piece I think would get to firm culture and strategy and what firms need to do and there is a great presentation by [Mark Cosio on PCPS , Barry Melonstouger 1:38] referenced some of that and it is keynote. And then they had a deeper dive into the diversity and inclusion initiative. So I would say those were the big items going on. It was pretty interesting. It was a very good council meeting I thought. That’s what everybody said.

Pete: What was one of the biggest things, biggest takeaways that you have got from the council meeting?

Tom Hood: Well I think it was a sense that people seemed to really understand how impactful this exponential pace of technology really is and you know there were some people there that were really you just kind of hear a buzz in the room as they talked about what’s that one of these computers are actually doing. And then later there is a talk that you know auditing, continuous auditing and the ability to audit a 100% of the transactions is not that far into the distant future. Actually could be a couple of years away.

Pete: Wow!

Tom Hood: I think that everybody was touched.

Pete: I never thought about that way that a 100% auditing with cognitive computing could be, actually could occur.

Tom Hood: Yeah. I mean they had a guy, one of the last speakers, was from, I don’t know if he was directly with IBM but at one point he was with IBM in the IBM Watson project that he was talking about all kinds of things that Watson is doing and that is on the heels of the KPMG Watson deal. Not too long ago that was announced. That really talked about this you know the age of cognitive computing, all the big four have similar projects but literally they were saying that they could feed [wards 3:19] in a 100% of the contracts in a public company and they could like read them in minutes where it would take a team of auditors to you know forever to try to do that.

Pete: That is a, that’s kind of a disruptive business model for the accounting profession.

Tom Hood: Yeah I think you know the notion is and this is kind of my view, so it’s funny Barry had a couple of views on there. There is a book out right now called “Future of the Professions”. I don’t know if you, if it’s come under your radar.

Pete: I haven’t seen it yet.

Tom Hood: It’s one of like [Robin Bakers 3:51], one of my buddies, he always, he thinks it’s one of the best books there is. Anyhow it’s by a father-son from England and they basically talk about the end of the professions, plural. So they talk about legal, medical, accounting, architecture, any of those and they paint a pretty dystopian view from that perspective. Others have said you know there were all the routine, basic analytical, things that can be rules based, a cognitive computer can handle but there would still be a judgement and critical things and obviously trust and the emotion side that computers can’t do. So you know the message I think from all this is we are gonna need new skills and we are gonna need them faster than probably any others think and we are gonna need to focus on things that computers can’t do. And certainly I think from CPA perspective you know the trust and the relationship side it’s always been a cornerstone of our profession, is an area that we can leverage. But the bottomline is that those entry level things you know the ticking and tying and auditing and some of the basics, a lot of that is gonna go to the machines.

Pete: You’ve been talking about this for quite some time and you got my attention early on as relates to the book “The Second Machine Age” and then I turned you on to the book ‘Humans are Underrated’ which talks about this cognitive computing. But you have been talking about this for a while. How does it feel that, the visionary that you are, that other people are now starting to see what you have been seeing?

Tom Hood: Well I think, I don’t know that, so I like to say that it’s the Isaac Newton quote, “The reason I can see farthest is I stand on the shoulders of giants.” I guess I am fortunate in that between the folks we work with in the association, people like you, that are on our BLI thought leader team and my, you know my network with a bunch of thought leaders around the country, you actually do get to see a little further ahead and I guess it’s been my mission to try to help our profession see further, see around the bend a bit so that we don’t get destructed. Because that’s the last thing I wanna see happen. So I mean it is kind of neat that we are starting to see people get it and begin to say, “Now what can we do about it?” So I do think that’s kind of cool.

Pete: That is kind of cool that they are starting to see this and you are talking about what can we do that computers can’t and it’s the three C’s: communicate, collaborate and be creative.

Tom Hood: That’s exactly right.

Pete: And Geoff Colvin’s book ‘Humans are Underrated’, he said that we are moving to more by client relationship type of environment and I have said this in a couple of other podcast but when I am speaking at a conference of CPA’s, I will ask them what business are they in and I hear tactic, auditing, I hear consulting, all of this and I go, “No, no, no that is just a by-product.” and I will get them a little bit uncomfortable but then I will say, “You are in the people business first and foremost. It’s the relationship that you build with your staff and the relationships that you build with your clients and customers keep you in business.”

Tom Hood: That’s absolutely right, absolutely right.

Pete: But the skills that CPA’s will need in the future, what additional skills do you think they will need outside of just some of the basic analytical pieces?

Tom Hood: Well I think you know, it’s funny because I was talking to one of the chief [appointing 7:35] officers in one of the big four just the other day and just kind of asking you know him like what do they see and what’s, what are they thinking about. And it’s funny. The number one thing that came up from him was just consistent with all of our research, is strategic thinking.

Pete: Okay.

Tom Hood: Right so because I was talking about the notion of data analytics so you know the fact is the whole idea of understanding data and being able to analyze is critical but that comes with actually if you want to add another C to your three C’s, it would be context.

Pete: Context?

Tom Hood: Yup. Context. Because that’s what we mean by strategic thinking.

Pete: Could you give me an example of that?

Tom Hood: So you know so what does context mean? Actually good friend of mine [Will Abderacus 8:29] who is the chief storyteller at the AICPA. He is the guy who does all the videos. He had a quote one day which I love and I never forgot. He said, “You know there is a saying that content is king.” and he said, “If that’s true context is the kingdom.”

Pete: Interesting.

Tom Hood: I love it.

Pete: Yeah.

Tom Hood: Cause context is what’s going on around you. Right, so if you think about wisdom, wisdom is really looking at patterns and connecting dots.

Pete: Okay.

Tom Hood: If you think about what makes CPA’s valuable in many of the disciplines they are is it they have this deep understanding of a domain. That’s context and they can neck that domain to another domain’s problem and help solve it. Now that’s even better. Right?

Pete: Right.

Tom Hood: You learn from manufacturing and apply it to retail sales. So the context is really understanding the business and the broader environment of the business. It’s like what’s going on around the business so that you can understand what part of the data might be really important.

Pete: So they would, so well let’s take a CFO. A CFO would need to truly understand all aspects of the organization such as sales, customer service, IT, HR and understand how that operation runs, not just the financial information or the analytics but just some of the idiosyncrasies of each department. Will that be along these lines?

Tom Hood: Yes, exactly right. I will give you a great example. This past week we had our business initiative conference and we had the Vice President of strategy and finance from Pixar.

Pete: Oh! Okay.

Tom Hood: Yeah. Yeah it was incredible. Right? So he gets up there and he says, “You know the first thing we do with every accounting person in Pixar is we make them spend a week understanding how movies are made.”

Pete: Nice.

Tom Hood: Through every step of the process. That’s context right?

Pete: Right.

Tom Hood: It’s what we hear all the time from business people etcetera is I want my accountant from inside a company or organization or I want my public accountant, I would want them to be pro-active, I want them to be forward looking and I want them to understand my context. So what’s my competition like, what am I focussing on, what am I, what’s the important parts of this business and how do I help make that better. Right? That’s the key. So if you have context and you have domain knowledge which accounting gives you then you can start to say, “Now I could understand what numbers we might need and what numbers might mean and I could be beginning to dive into that big bowl of data and make sense of it for people.”

Pete: But it’s just teaching or informing the accountant that the importance of the context because when you say now looking forward and looking into the future. But if you think about financial reporting, that’s all about history, it’s about yesterday,not tomorrow. So how do you change that mindset?

Tom Hood: Well I think that, I mean that whole piece of moving to the notion of windshield and get away from that rearview mirror, I mean that’s absolutely critical. By the way that is the number one reason that clients leave their public accountants is a big reactive, the reactive versus the proactive is also one of the top challenges we are seeing consistently across the entire accounting CPA domain. You know I think to your point Pete, It’s about making time for the future and teaching them how to look forward. So you know we have been working with this futurist [Dan Burrus 12:17] on how to start thinking about anticipation, how to understand emerging trends, what can you predict. He has a whole methodology called ‘hard trends’ to say there are things about the future you can predict and if you hang your hat on those, the risk goes down in your life and success goes way up. So if we could, you know CPA’s are very logical people. What we found when we exposed them to this is that they get bolder because CPA’s like the one with facts. The difference is instead of historical fact, it’s a future fact. And suddenly they go, “Okay I can get my arms around that.” and so that we see them become more creative and we see them become more future focused. The other thing that I think you said earlier, idea of creative collaboration and communication is the collaboration piece. I believe that we are at an age now where the collaboration curve is going to be more important than the experience curve.

Pete: Like I always said that the collective knowledge inside the organization is far less than the collective knowledge outside the organization.

Tom Hood: Exactly. And yet a lot of CPA’s are so busy doing the current stuff that they are not getting outside to do that.

Pete: Because I keep thinking about they are starting to see the light bulbs coming on, they anticipate, anticipory CPA, I mean anticipating to CPA seems to be like an oxymoron but I say what key skill would a CPA need to develop in order to: one, to be able to look out into the future, two, accept that there is going to be risk when a lot of us, lot of people in the profession are very risk adverse and three, if I don’t do this I might not have a job or I may not have a firm anymore in the not so distant future.

Tom Hood: So I think there’s two pieces. One is what skills do I need to be future focsed. Right?

Pete: Right. right.

Tom Hood: And really, see I think the beauty is the CPA has got the disciple of accounting, they understand business, the language of business. So now it’s a matter of saying, “What can I be doing to be more predictive and think about what’s coming at us instead of just what’s happened.” So it is a mind shift from that perspective. The next part of that is how do I understand trend. So the CPA.com did a future ready study, may be it’s about a year, almost two years now and hiredd a guy to basically assess it and only 8% of CPA’s themselves said were future ready. Now what does future ready mean?

Future ready is the ability to predict and adapt to emerging trends and issues and business, social, economic, political and technology. You have to get a knowledge context of what trends are, what they might mean and you have to begin to say, “How am I going to keep my radar longer and wider, looking for those and how do I begin to sift and filter those things.” And the financers can teach that. And when you throw in with [Dan Burrus’ 15:33] research has been, he uses the discipline of hard trends. He says there are really only three, I guess you could argue four if you add globalization but technology, demographics and regulation. So once you, that’s the narrow you know kind of your stoke narrow, so now you could start to dig into those. I mean demographics, it’s kind of a blinding flash. It’s obvious. But we all know how old everyone is today and we know how old you will be tomorrow.

Pete: Right.

Tom Hood: Right? I got a whole bunch of firms call me up go, “I need one manager.” I will be like, “Unless the spaceship lands and releases them, they are not there.” There is like physically, there is not many of them and it’s a finite resource. Right? It’s not gonna, you can’t create a 35 year old in a day.

Pete: Right.

Tom Hood: So you know but it is funny because why we laugh at that. How many firms, how many organizations, how many even like governments have not planned school districts because they needed to look at demographics?

Pete: Correct.

Tom Hood: So it’s like getting, so there is a, basically there are just some simple things that you could begin to learn that helps put your head around that stuff, then you have to get those other skills like creative, like strategic thinking, you have to start to but you can learn those and we do a bunch of things that teach those. I mean you’re involved in us helping teach some of those stuff to CPA’s. Like what did you see, what’s your thinking about that?

Pete: It’s fine but as it goes to crew well I’ll backup. You said something a moment ago about we know the language of business and it is a language. It’s a language like Japanese, it’s a language like Greek, it’s a language like Chinese. And most people who are not accountants don’t understand our language. I use the example when you say depreciation to a non-accountant, they go, “Oh that’s the value I lose in my car when I drive rough in a new car lot.” And the account looks and goes, “No, no, no. That’s a systematic allocation of an asset over time.” And ‘Ooh’ Scooby Doo comes out. So I think one of the things with the audiences that I am, I am fine when I say we have become better translators, we have to take the complex language of accounting and put it into a context that our audience can understand first and foremost. As we are working our way throughout the organization, understanding the different pieces and parts of stuff, what we have to get away from accounting speak and speak a simpler, more common language in order to increase the understanding. That would be a one. Number two, you know I have a course How to Dump SALY, same as last year and fun and new creative way.

And I will ask when the first question, “How many in this room feel that you are creative?” I might get a hand or two but then I go, “Okay let me rephrase that. How many in this room have ideas?” and all of a sudden all these hands come up. And I said, “Basically everyone in this room is creative because they have ideas. What’s stopping those ideas from coming out of your head, on the paper, there is the roadblock from creativity. It’s the ability to get bad ideas because they lead to good ideas. No ideas lead to nothing and create a culture that allows that whereby taking that inner critic that we have and silencing that inner critic during brainstorming but then bringing the inner critic out during an innovation process where we are gonna look at these ideas and see which ones work and which ones you know are bad ideas.”

Tom Hood: Yeah.

Pete: I think from that point it’s just one, get it into the point that they do see themselves as creative and in creative confidence by Tom Kelly, in his book he mentions about the best way to become creative is to think that you are creative. Exercise that creativity muscle. So when someone tells me, “Yes but I can’t do that.” or gives me the reason, the improv guy comes and says, “Yes and here’s why you should be doing this.” Yes and don’t stop yourself, continue to learn, push yourself, open up other opportunities. The more and more that I matter to find this audience, I am starting to see the light bulb go on and as evidenced by their reaction, them embracing these ideas as well as seeing class sizes increase. I am seeing the change and it’s a slow change but I think that’s the part that worries me a tad bit, it’s a slow change and I think this change needs to speed up for the good of the profession.

Tom Hood: Yeah. I would completely agree with you and that notion that let’s face it we are dealing with this idea of exponential change. So that’s the, I think that’s what you know you were talking about, that’s what I certainly worry about. So I think you know well I had hope from this AICPA conference that I started to see things happening in that perspective. People really focussing on this pace. I think you know as a profession we’ve always been able to adapt. The question is can we speed it up a bit to catch up with this and then you know get a handle on it. Right?

Pete: Right. The other side that I think about is you know, the accounting programs out there are full of students and they are coming into the profession but I am thinking about that sophomore accounting student at whatever university, by the time they graduate what we have taught them in the classroom will that even translate to the work environment?

Tom Hood: Well they are already talking about that and I think you know they were saying that you are at a point now where in half life of a college degree literally is gonna be two or three years and literally by the time you start college what you learn will be completely obsolete by the time you graduate from college.

Pete: Exactly. And even though what they do teach us in University gives us a, somewhat of a foundation of accounting, understanding the balance sheets, income statements, debits, credits and all of that and helping us pass the CPA exam, it falls short on some of these other skillsets that we are saying that CPA’s need that really should be part of the accounting curriculum.

Tom Hood: Absolutely. I mean, I think there is some movements to try to change that from the academia perspective and then the other part quite frankly teaches that the employers are gonna have to pick up the pace too because it’s gonna take a while for education higher ed to adjust but so what that means is you are gonna need to make up for that gap inside your firm in your company.

Pete: Yeah and having spent some time in higher ed and academia, I know they can turn a battleship on a dime. And they are not quick to change. So yeah it is gonna fall on the employer and I guess the next, my next status relates to that is hopefully that employer whether it’s the firm or organization having to provide learning in these new skillsets, that they look at this as an investment in the organization, not a cost of doing business.

Tom Hood: Right. It’s true.

Pete: Because if we look at it as a cost of doing business or you know you are talking demographics as you well know millennials have outnumbered us now in the workplace and there is no way that we are gonna be number one. CNBC, I believe last year, late last year said that millennials had over over two trillion dollars to GDP in the U.S. so we have gotta this huge force coming in. Well excuse me, I take that back. We have got a huge force that’s here and now-

Tom Hood: Right.

Pete: That we need to begin to adapt to that and provide that investment because there is a shown that if you invest in your people and give them what they need and may be now give them, may be little bit bigger voice within your organization, they are not gonna leave. But the tag on millennials are, “Well they are just gonna leave in a few years so why should I you know provide them the skills and they are just gonna take it some place else. “ I think …

Tom Hood: Yup.

Pete: I think that’s out of date thinking.

Tom Hood: Excellent question. I mean I think it’s the old, if we train them, the will leave and the corollary is what if we don’t train them and they stay.

Pete: Stay. exactly, exactly. So you know I think we have as a profession a lot on our plate to look at and to be prepared for because as you said things are moving in such a rapid manner versus you know I remember when I had an eight track player, then I went to a cassette player, it just seemed, but now we are going quicker, faster. What I read the other day Uber is looking at purchasing driverless cars for their fleet in the future. So it’s real and in front of us. Any other thing, any other big takeaway that you got out of council?

Tom Hood: I may, I think the other part is I think there were certainly the AICPA, many state societies, other groups. So I think the beauty is there is as a profession we are start to work on and think about this. So there are some resources that people are working on and trying to help facilitate this. I saw the institute basically make a call for leadership saying, “We need new people in council to be leaders and help guide this profession through this big, giant shift change.” and so that gives me hope when I see that kind of stuff.

Pete: Yeah. Well you can pass this along to Barry, being a former council member and really see this issue. I am willing to help out anything which way I can.

Tom Hood: Awesome. Well, I will you know right now they have got, they are rolling out like their own kind of resource type thing around this stuff but I think the bottomline is that to spread the message , training people in the new skills, some of those kind of things that you are already doing Pete, is the kind of stuff that we need to keep doing.

Pete: Well, I thank you and I thank BLI for the opportunity to put me in front of a wide variety of audiences and I will keep carrying the flag.

Tom Hood: I hear you. Let’s do it, let’s do it.

Pete: So not to take up too much more of your time but I, something I just instituted that, I don’t remember Tom, are you a golfer?

Tom Hood: Not a good one.

Pete: Not a … so we should play cause I am neither. I am not a good one either. But this morning I was watching some old episodes of David Feherty show on the golf channel. I love the Feherty but he was interviewing Nick Saben and he did a rapid fire segment where he asked him these questions just kind of you know get to know the personal side of the individual which I thought was really fun. So I would like to do a quick 10 question rapid fire session with you. So maybe you get a different perspective or get to know you just a little bit better. You up for that?

Tom Hood: I am up for it.

Pete: Okay. You’re a little nervousness in your voice there for a second? First one is Jimmy Fallon or Johnny Carson?

Tom Hood: Jimmy Fallon.

Pete: Jimmy Fallon. That’s a tough one for me because I am an old Carson fan but I will tell you Fallon has really done well.

Tom Hood: Yeah.

Pete: The Baltimore Ravens or The Washington Redskins?

Tom Hood: Definitely The Ravens.

Pete: The Ravens. Bruce Springstreen or Pearl Jam?

Tom Hood: Pearl Jam.

Pete: I was hoping, just so the audience know, when was it, a year so ago that you went to Seattle and saw a Pearl Jamming concert?

Tom Hood: Yeah. it was a, yeah it was a year and a half ago.

Pete: Yeah. and I am still jealous about that.

Tom Hood: It was incredible.

Pete: Which one?

Tom Hood: My son, my older son, he took me so it was fun.

Pete: Oh wow! I will play it to you later, how that experience in Seattle with Pearl jam. What is your favourite kind of meat?

Tom Hood: Favourite meat would have to be rib eye steak.

Pete: Oh okay. It sounds good. Here’s a tough one. Microsoft Excel or your fingers?

Tom Hood: Microsoft Excel.

Pete: And …

Tom Hood: Obviously I count much.

Pete: And back to little bit of our conversation I truly believe the excel won’t exist too much longer if cognitive computing takes over as the way it looks.

Tom Hood: That’s true, could be a very different world.

Pete: Yeah.

Tom Hood: You are exactly right.

Pete: Being the technology guy that you are, Facebook or Periscope?

Tom Hood: Facebook live, how about that?

Pete: Oh Facebook live. Now …

Tom Hood: Now we have to replace Periscope.

Pete: Have you dabbled in Periscope?

Tom Hood: I have.

Pete: And your thoughts on Periscope.

Tom Hood: I mean I love Periscope. I think it’s you know it’s the Twitter platform. But we just did a live broadcast to a student group about becoming a CPA on Facebook live and it was really smooth and that’s why I picked Facebook for that standpoint.

Pete: Wow! I will have to look into that because–

Tom Hood: Yeah.

Pete: I will check that. I haven’t seen Facebook live but that’s after we hang up that will be the next thing I do.

Tom Hood: Same day, I will be there.

Pete: What is your favourite movie?

Tom Hood: Favourite movie? That will be a tough one. Actually it might be Gettysburg.

Pete: Oh nice. nice.

Tom Hood: I am a history buff and I love the, you know kind of the story behind that and they did a good job developing the people and the characters.

Pete: You say you are a history buff. Are you a broad history buff or civil war history buff?

Tom Hood: It’s all a little bit of both, mean did Marilyn in the middle of most of the major battles of the civil war. So it’s been part of my you know kind of my upbringing forever. So that’s a definitely special area but like you know we are for Nick Henry here [29:29] so we are immersed in lots of history right here in Maryland Arians [29:33]. So that’s what I think must have driven that you know those kids you know always end up going to these battlefields and stuff as a family trip to do stuff.

Pete: Yeah. that’s cool. What’s the one song that get you motivated when you need to pick up some energy, what would you play on your iPhone?

Tom Hood: I mean I got a whole bunch of them. These are like we call them like arena songs. Right?

Pete: Right.

Tom Hood: One of my favourites really would be, ‘Living on the Edge’ by Aerosmith.

Pete: Oh nice, nice. What would other one be? You said you have a whole, a bunch of these.

Tom Hood: I mean, I like, well I like what’s it the Kristin Chenoweth on I Was Here so kind of an wise song from a heck of a lady vocalist. That would probably be another good one. Fight Song is another good one that’s kind of a more modern song. I mean, I love, I am just kind of very eclectic. I like kind of whole bunch of song. That would be, those would be some of those cool ones you get, kind of get you going. Leonard Skinner is always fine for some of those pump up songs as well.

Pete: Yeah. I mean to think about because when somebody asks me that question my number one go to is “Badlands” by Bruce. But when you threw out Skinner, I can think of a few way that get me motivated as well. And the last question. Name one item that is still on your bucket list.

Tom Hood: One item that is still on my bucket list. Well it definitely be, probably a great trip to Italy. That would be my bucket list.

Pete: Oh I would highly suggest that. My wife and I went, has been about seven years ago and absolutely fell in love in Italy. So I would suggest that you move that up to the top of your bucket list and go.

Tom Hood: I might get some tips from you when I do it. So that’s pretty cool.

Pete: Oh please do because we still have a lot of stuff from there and just absolutely enjoyed the two weeks that we spent in Italy and we are Greek. And we have said it’s be a hard choice whether we go back to Greece or go to Italy. We were just so enthralled by the Italian people.

Tom Hood: Interesting. That’s pretty cool.

Pete: Well Tom I can’t thank you enough for taking time to spend with me on this podcast. I once again, I greatly appreciate it and thank you so very much.

Tom Hood: Oh I love being on here with you. So it was awesome. Thanks very much Pete and good luck running the show.

Pete: Thank you.

Pete: Hey, Mike. Thank you for joining the show. I greatly appreciate you taking time and I’m so looking forward to this conversation.

Mike: You know what, I am too Pete. I think we have very similar stories and we worked with a lot of the same people,I think in the industry.

Pete: I think you’re true to that. My first question that I always ask is can you tell me a little bit more about yourself?

Mike: Sure. You know, I’ve been in the financial services business since the mid ’80s. The best way I like to answer that is I like to go back to the initial conversation that I had with the editor when we started to write the book and she said, well, tell me Mike, she says, “Is this a how to book or is this an inspiration book”. My answer to her was yes. She says, well, it’s either or. I said no, it’s really isn’t because as you’re going to see this is a how to but it is full of a lot of the encouraging methods that I’ve used throughout my career.

Now, Pete, what you got to understand is I really, as you do, understand the struggles that financial advisers faced: The struggles of acquiring clients and the struggles of retaining clients. Heck, when I started in the business back in the mid ‘80s, the dollar was at 776 to age myself a little bit. Now, at the 17,000 plus that it is today and the reality of it is I know what it takes to dial the phone 300 times a day. What I found very quickly is I didn’t want to do that for the rest of my life. What it really caused me to do was to find memorable meaningful ways to connect and acquire clients.

Pete: You are the masterful client relationship builder. I’ve read your book. I’ve absolutely enjoyed the heck out of it. It applies to financial services. It actually applies to across all industries. Anybody can pick up this book and walk away with some really great nuggets and we’ll talk about some of those. Myike, I guess, my question is did you just wake up one morning ago, man, it’s a beautiful day here in Louisiana, I think I want to write a book.

Mike: You know Pete, I’ve heard a lot of the stories as to why people wrote a book and my journey was a little bit different because what many people do is they write the book and then once they write the book, they put together seminars and presentations and everything else. I did it the opposite if you will. I actually, as I mentioned before, all the years I was in the business, I used these tools. This is nothing that I just decided to put in a book. These were ideas I got from the most successful in the industry around the country as I traveled from city to city. I decided that you know what, before we leave this place, we have a song in this and it’s a song that has to be sung. It was one that I felt very passionate about so what I did is I actually went out and put together a seminar first. I went and visited advisers that I worked with and said hey, what do you think? What would you add? What would you take out? Then, I tested it. I gave the presentation in a number of settings and I got feedback. With the working of the editor, we were able to massage this and put in a format that’s very easy to use and very easy friendly.

The way I designed this book, Pete, is very much like a restaurant. When you go order in a restaurant, you got four choices. You got to tell them what the appetizer is. You got to tell them what salad you want, what entrée and what dessert. I took the ideas and I put them in four areas: Fun, personal, mindful and seasonal. You can go pick and choose as you see fit with the ideas that fit your style or fit your business. But one thing I can tell you is that these ideas are proven and it worked.

Pete: I ask the questions you were talking about that it popped in my mind how we met. Actually, we had never met but when I get back from Christmas vacation, there was this package in my office. I opened it up and it says book. I went to the Amazon and I go, did I order this one night? No, I didn’t do that. Where in the heck? Then, I opened it up and on the inside cover it says Peter, well, gratitude is often unexpected. It’s always welcome. Adam wanted you to have a complimentary copy to help you further build your business in the New Year. Make today extraordinary and happy holidays, Mike. I mainly got this weird goose bumps. What? It literally just blew me away. Now, I picked it up and I read the first chapter and a half in full transparency. I set it down and I said I got to read this. I got to read this and I’m bad at this. I didn’t pick up but when we met to speak in a university in Pittsburgh after we introduced ourselves, we had that conversation. I started from the beginning and I think I was done in two days. I mean I just devoured this thing and it is on my to do list to read again because there’s so many tips and nuggets in here that it’s wonderful.

Mike: Yeah, Pete. We share a similar story because when I sent you the book, you did something that a lot of people don’t do and that is immediately you reciprocated and sent me a copy of your book. I got the same thing that you did. I read the first couple of pages. I literally put it on the stairs up to my office and it sat there until I went to Pittsburgh. I came back from Pittsburgh. I read the book. I outlined it. I have four pages of legal pen outlined and what amazed me were the similarities between your message and mine. You know the importance of listening. A mentor told me a long a time ago when I started in the business. He says Mike, you’ve got two ears and one mouth for a reason. When I saw that in your book, I said oh, my goodness. Let me keep reading. We talked about stories and how stories are the gifts we give others. They’re kind of a way we explain things and the pieces of the puzzle that connect us, if you will, with other people.

The part that really resonated with me was throughout your book, you talked about the importance of relationship with the audience and that’s what gratitude marketing is all about. It really is all about recognizing and developing meaningful memorable relationships with the people that you want to work with for the long term and not just for one transaction. So, I’m about building long-term relationships and you do that by being concerned more with what the customer or the client wants than what your agenda might be. You get the direction, if you will, by being the guy who asks the right questions. I know that’s something that you teach and you promote and that certainly have been a part of my business for years.

Pete: It’s an important piece of my business. That’s how I’ve grown my business and as you write in your book and thoroughly believed and that we’ve both not transactional business. We’re the long-term relationship business. In order to do that, we’re going to have trust with our clients, with our customers. We have to have trust and respect with them, which leads me down this one path. But financial advisers, finance people or accounting people tend to be dated driven and live by the data and won’t take any non-data into the calculation, into the process of coming up with an answer or delivering the product. I believe that data is part of the answer but there’s a lot more that goes into it than just the actual analytical side of it. I always say there’s qualitative and quantitative information that you need to use in order to make the decision. I think your book brings that out in so many ways.

Mike: You now, Pete, when I was in the business as we discussed in Pittsburgh, a lot of my clients were CPA’s and accountants. The way that I would establish the relationship as I go into the office, unlike other managers or representatives that would walk in and just want to get into a sales pitch, I would sit down and say, hey, tell me about your brackets. Tell me about your clients, tell me about the type of clients you have, tell me what you do. How you approach your business because one thing that I found is that if you want the heart to prompt the mind to do what logic tells you, a warm caring attitude is vital. So, I got them to think not about just the numbers but about the long-term impact that they held on the client and I would share with them all types of little tricks.

A couple of my favorite words are tell me. Mr. client tell me about your goals, tell me about your objectives, tell me what you want for your kids down the road, tell me what you want to do when you retire. Tell me, tell me, tell me. Once they revealed to me what they want and recognized it’s all about them, it’s not about us, once they tell us what they want, then I’m able to suggest strategies in which they can deepen those relationships. I got to tell you, you talk about gratifying. Certainly, this is a wonderful business financially but I’ve gotten so much satisfaction out of walking into an office where there’s a fellow who might be a CPA and my son’s a CPA. So, I totally understand the way the business works. But to take someone who’s used to a practice where he is totally obsessed and totally focused, if you will, on the numbers and showing him how he can have an impact within 18 or 24-month period, actually make more on the free side of the business on the investment side than on the accounting side, that’s pretty gratifying. I’ve got some long-term friends as a result of these relationships that I’ve helped them for.

Pete: So, how do you convey to someone in the financial services community who might not see the value of gratitude marketing, of building relationships? Is there a way that you’ve been able to have them change their opinion, change their mind or see it in a different perspective?

Mike: There is and what I start with is I start with asking what they’ve traditionally done in terms of marketing and what I found is that traditional marketing speaks at people and nobody likes that. Gratitude marketing engages and connects with people. In other words, what we do is we meet people where they are and I convinced them that expressing gratitude is not a onetime thing. It’s a sound way of doing business and it’s the consistent way of running your business.

Showing appreciation, what that can do for your business is three things and I referred to it as the three R’s. First of all, it can address client retention, increase client retention. Now, when I look at the statistics and the studies in the business today, they tell me that it takes seven times more money to acquire a new client than to retain a client. For my money, I’m going to try to retain clients and take care of them. Number two, client referrals by far the best marketing strategy in my opinion. In the 30 plus years I’ve been in the business is to cultivate a consistent referral program. What that’ll do for you is that it will very cost effectively allow you to double your business. Think about it Pete. If you get every client to just give you one referral of person similar to themselves, you’ve doubled your business without a lot of money in a lot of outlet. The third R is revenues. I want to help them increase revenues. How do I do that? Well, if I take care of the retention and I take care of the referrals, the third one’s going to take care of itself because ultimately, people and clients work with people they like, they know and they trust. So, everything that I tried to help them with in gratitude marketing is to nurture that culture of trust, a huge component. I know you’re big on that as well.

Pete: Very much so. Can you give us some examples of how you institute gratitude w ith your clients?

Mike: Yeah, it’s funny because you often hear it said that it’s not rocket science and when I tell it’s not rocket science, it’s not. You mentioned there my biggest point with it and that is well gratitude is often unexpected. It’s always welcome but my second point is that the appetite for a sincere thank you is unlimited. Let me give you an example. I had an adviser that I actually worked with for over 30 years. He came to my website and he inquired into the gratitude marketing community. He actually asked me to give him a call, which I did. I called him and we spoke for about 10 minutes and he said Mike, I gotta tell you. He says, there was an idea in your book that was really a wakeup call. Here’s the guy who’s been in the business 30 years, one of the top guys in his firm. I said I got tell you I’m curious, which one was it. He said it was the thank you note. He says Mike, when I started in the business, I used to handwritten thank you note every day to clients and I stopped. He says, since I completed your book and put it down for the last two weeks, I took your suggestion and I’ve sent three thank you notes a day. I said wait a second let’s do the math here. What you’re telling me is that you sent three notes a day times five days a week. So, week one, you sent 15 notes. Week 2, you sent another 15. So you’ve sent a total of 30 notes. What’s the ripple impact on your business?

Now, Pete, if we need to stop there that would be a great story. Here’s the rest of the story. Today, not a lot of people take the time to write personal notes. They used email. Here’s the statistics. According to the U.S. post office, the typical American household waits two months for a personal letter. Have we just identify an opportunity for you to differentiate yourself, absolutely. That’s what gratitude marketing is all about. It’s how do you connect in ways that may be obvious to many but they aren’t executed. It’s all about consistency of execution overtime.

Pete: Talking about in your book, you make a reference on how you get referrals. There’s something that you do that helped you get referrals. I believe that was in chapter 8 or something like that.

Mike: It’s funny because is what I’ve done is there’s a number of ways and I’ve broken it down into the books so that it’s easy and I tell folks I said look, there’s three ways you can do it. You could do it passively. You could do it one at a time or you could do it proactively. In the book, I give them some examples about for example, I have four placards if you will that I’ve seen as I’ve traveled through offices through the years and these are the four that I have found that the adviser used them got great results. One, for example says the majority of our new clients were referred to us by clients like you. We appreciate your thoughtfulness, very simple and very passive.

Our practice continues to grow by referrals from our clients. Many thanks for your trust and confidence, very simple. This can either be in the reception area. They can be literally on the back of your door and as the client opens the door and lock out after the appointment, they see this. I’m a big believer. We don’t get what we don’t ask for and the majority of clients are very willing to refer if you provided the service that makes you referral. I don’t know about you but if I’m serving somebody and I’m providing a way for them to reach their goals and objectives. I would be doing them a disservice by not asking for referral because I don’t want them to be going on that trip around the world by themselves. I want them to have four of their friends with them and how can that happen? Well, if they are able to work with the adviser. It’s a win-win scenario.

Pete: The one that I really like and I’ve actually employed a version of it is when you say in the book that is if someone gives you a referral you make a donation to their charity.

Mike: Oh absolutely. You know what, I am a big believer in that. It’s interesting because I’m going to go off and just to [inaudible 00:17:37] just for a second because when I wrote the book, never in my life that I envisioned the doors that it would open up. I thought that this was going to be a tunnel vision financial services book. I have had people from all industry just a couple of weeks ago. I spoke to one of the largest charities in the world that called me to talk about gratitude and the suggestion I made to them is listen guys, I’ve got an idea that if you will implement this, I think I can incrementally increase your donations and it’s this. Talk to your clients. Ask your clients what they’re going to be giving to their clients as gifts for Christmas. Then ask them what their budget is. Once they give you the number, say how would you like to make a donation to this charity on their behalf and then what I find advisers then do is they send out a Christmas card with a little note in that says Mr. Client, on your behalf, we’ve made a donation to whatever the charity may be. When the client gets that, wow, that’s a huge wow and that’s what gratitude marketing tries to do. I tried to create wow moments so that clients feel more comfortable with the relationship. It all starts with that caring attitude and that’s how I utilize that referral idea.

Pete: Yeah, I read that. I sat back and reflected and I just started this year when I was at the Washington Society of CPAs speaking there on April. I have been talking to the person who heads up their educational foundation and I said Kimberly, here’s what I’m going to do. For every class that I teach at the Washington Society of CPA’s, I’m going to donate 50 bucks to your foundation. You would’ve thought I said 5,000. Her jaw hit the floor and she says, are you kidding me? I said I taught too. You got a hundred right now. I’ll send you the check when I get home and I’m due to be back out there in June and teach two more. I said that’s $200 donation. Why are you doing that? I just want to help. I want to help the profession and I want to help profession in the State of Washington with your educational foundation because I used to send on the Ohio CPA foundation and there’s more than just one so now, I haven’t publicized, well, I guess, I am now. I haven’t publicized this wherever I go, I’m going to give at least a $50 donation to the charity of whoever’s sponsored me that day. I love the idea. It’s another way of giving back to the profession as well as building a stronger relationship with your clients.

Mike: Pete, I got to tell you. You really got me going now because that’s my mission and that’s my passion. It’s to help as many businesses build robust, stable, sustainable businesses by simply using these basic ideas. You know what it boils down to? I look back through my career and I was just on the phone this morning with a gentleman who I’ve kind of mentored throughout his career. As matter of fact, he was talking about wanting to use my book and giving out to advisers, which obviously I was very much in favor of. But we talked about the fact that you got to do the things you don’t want to do when you don’t want to do on so that the day comes when you can do the things you want to do when you want to do them. The way that happens is by doing the little things, paying attention to the little details. Just Monday, I had a review from one of the most popular bloggers in our industry and basically, he ended up the review as a four-page review by saying you know, what’s Sciortino’s book all about is consistent execution. What I want to be is I want to be the guy who works with the adviser, with the business and helps hold them accountable because if they will follow these proven formulas, they will get the success that they desire as an example.

Pete: You know, like you said, it’s not rocket science but I think it’s creating a habit and I talked about this in my book and I talk about it a lot. They say it takes 21 days to start a habit but it takes a lifetime to maintain it and that the part that we don’t put at the end of it. It takes a lifetime to maintain it. Visual stimuli are just constantly doing it. I’ve got a posted note that just going up on my computer screen, three thank notes a day so I can create that habit. I mean I create the “yes, and” habit by my cufflinks that I wear. One says yes and one says and. We’ve all been on a diet before and we’ve all started New Year’s resolutions. We’ve quit. Why I haven’t because we haven’t kept the stimuli in place and follow through to your point. I really don’t want to write this three thank you notes today. I’d rather do something else. No, write it, get into the habit of it. It will pay off big in the long run.

Mike: You know Pete, I think about success stories and one of the most revered management consultants is a fellow by the name of Peter Drucker. He attributed his success to the fact that he wrote 12 thank you notes a day. Here’s the thing. Three a day, I’ll give you four weeks of vacation. That’s 720 notes a year. That’s 720 opportunities to show off and differentiate yourself from the competition. I’ve trained sales folks in the past that I’m paying and they said who would write on to us? You mean to tell me that you can’t sit down each day and find three people that you’re thankful for something. It’s going the extra mile and that’s what creates robust sustainable businesses. This is not a one shot strategy. This is a long term. Heck, it took me 30 years to refine the strategy. But now, I have refined. I’m on a mission to tell as many people about it as I can and as many industries because I know that if they utilize these strategies, they will make a difference in people’s lives and that’s what you and I are all about.

Pete: Right. I want to throw something at you because I do a lot of presentations on networking and some years ago I was speaking to a group in Cleveland. There’s about 100 and some people in the room but I made the point of sending thank you notes, sitting down, handwriting the thank you note. This one woman stood up and said, I would throw it in the trashcan and I started laughing and we all started laughing. I said okay, why would you throw it in a trashcan? Let’s just say she is probably about 20 years younger than I am and she goes because it’s cluttering up my desk. Now, if you send me that in an email, I could properly put it somewhere where I could read it later but I like my desk nice and clean so you just cluttered it up, I would throw it in the trashcan. I’ve asked that question to a number of different audiences at different age groups and I’m finding that the younger generation, the millennial, or the young access, they’re more inclined to accept an email versus handwriting.

Mike: Well, you make a great point. But let’s think about where we’re fishing here. Let’s think about the CPA’s. Let’s think about the financial advisers out there. The baby boomers are the ones that have the money. The baby boomers are the ones that are going to be the beneficiaries of this huge transfer of wealth over the next 15 to 20 years. How do the baby boomers like to be addressed? It goes back to we got to meet our client age wise where they are. Okay, I’m a guy where, Pete, if you call me and said Mike, I’ve got a 30-page report. Would you like me to send you a hard copy or would you like me to email up? You know what I’m going to tell you. Pete, send me the hard copy. You know why? Because I’m going to take this yellow pen and I’m going to mark it all up. The reality of it is it’s a differentiator. You’ve got to know who are clientele is but I would rather have a client tell me, you know, don’t bother sending me those anymore. At least I know I’ve differentiated myself.

Pete: Exactly and that was a little bit to my point on a sidebar after the session was over. I asked her and said doesn’t this make a difference? My name is now in front of you and you could if you didn’t want me to do that, you could always tell me, hey, I’d appreciated if you just send me an email. So, she said, yeah, you’re right but I want to have a little fun in your expense. Well, I said well, thank you.

Mike: You know what, Pete, there are so many ideas out there. This is why I’ve divided the book the way it is. You know, it’s funny because my biggest challenge was how do I narrow it down. I mean I’ve literally have boxes of ideas but you know what’s been amazing to me is that ever since the book has been written as I’ve traveled around, I have gathered so many new ideas and I’ve got one that I’ve got to share with you. It’s not in the book but it was the most amazing asset retention idea that I’ve ever seen. It made me pause and realized wow. This company really gets the lifetime value of a client. Once again, it goes back to that long-term relationship. It’s not about the revenues that your accounts could’ve provide me this year. It’s about the fact that on average, my client stay with me let’s say, 9.8 years. It’s this year’s revenue times 9.8, which is a big number. So, let me set the stage. I’ve been travelling all day, connection through Chicago and a taxi ride to the hotel in January in Minneapolis. Now, for a guy from Louisiana to go to Minneapolis in January, it was a big meeting so I couldn’t miss it. Imagine my surprise when I walked into the Marriott. I got a smiling face behind the reception’s desk and she hands me this chocolate bar. I’m like wow, it’s probably nice but let me tell you, Pete, it wasn’t an ordinary chocolate bar. This is what it said. Mr. Sciortino, we appreciate your business. Thank you. So, let me say this. If the millennial don’t like the thank you card, try a chocolate bar or talk to me and I’ve got a thousand other ideas that we can work with. The reality of it is you got to do things that are different and it’s not the cost to the idea, it’s the thought that matters. What had really made me realized is when you personalize an experience, that’s when people get that deep connection. What a lot of businesses miss is that like rats on a treadmill. Let me spend money on marketing sales, marketing sales. If they would spend more time taking care of the clients they have, my goodness, life would be so much grander.

Pete: Well said, well said my friend. Mike, we could talk for an hour or so but what I think I want to do is begin to wrap things up because I want to do a follow-up podcast with you. Because I’ve a feeling between now then, either there’s going to be a new book out or this one’s going to get a bit little thicker or you’re going to have more stories. I don’t want it all to go away-

Mike: Sure.

Pete: But what I would like to do is I’m doing this thing called as I get towards the end of the podcast, I want my audience get to know you a little bit better.

Mike: Okay.

Pete: They know you by the book but I do this thing called a 10 quick questions. This is all off the cuff. I know that you live in Louisiana. How far out from New Orleans?

Mike: I live 40 miles north of New Orleans across at one time was the longest bridge over water in the world. Now, we’re number two, 23 miles straight across the Causeway.

Pete: Okay, so, this should be very easy for you. First thing, Mardi Gras or the Jazz Festival.

Mike: Well, being that my son and I now ride into Mardi Gras parade each year, now, you got on a real attention here Pete because a lot of people say that Mardi Gras is the greatest free show on earth. I would suggest that it’s one of the greatest displays and expressions of gratitude on earth because what you got to understand is Mardi Gras is totally funded by the members of the crew. The city and the government don’t pay for it, we pay for it and my son and I ride every year with one goal in mind. That’s to put as many smiles on kid’s faces as we can. That’s yet a whole another podcast on how we do that but understand down here, we throw bead stuffed animals everything off the floats. It’s an amazing time, an amazing time.

Pete: Wow, I’m blown away. We did not talk about any of these questions before. Knowing the area and New Orleans is one of my all-time favorite places. I think I’ve been there at least 14 times in my lifetime with another 14 more to go. Second question, Drew Brees or Anthony Davis?

Mike: Drew Brees, I mean you talk about a gentleman that conducts himself with class. I grew up in a timeframe where they were so bad. The people used to put bags over their heads if you remember. But the reality of it is there have been two quarterbacks in the history of Saints that are just class X. Archie Manning who was amazing but Drew Brees has conducted himself with class, has put the team on his shoulders. Drew Brees is more of a person, more of a gentleman off the field than he is on the field. I can’t stand up about the guy and I’ve never met him. Maybe, I need to send him a book. I don’t know.

Pete: I think you should send him a book. I really think you should send him a book. At least not through Anthony Davis. He’s a graduate from the University of Kentucky.

Mike: I probably should have brought this stuff by telling you that I’m not an NBA fan. So, I know who he is and from what I can see, he’s done a nice job but I’m more of a football fan and [inaudible 00:32:58] understand.

Pete: So what your favorite Cajun meal?

Mike: Oh man, you got me going there. Now, you want to talk about a long podcast. We could go on and on and on. It’s tough for me to name a favorite because our food down here is so unbelievable. The most difficult challenge my wife and I have when we travel is finding places that cater with the care of the people in the restaurants as they do down here. It’s absolutely amazing. Let me say this Pete. I’ll make this deal with you. When you come down, we won’t have to choose. We’ll go out to a couple of different restaurants. We’ll try a couple of different meals and once we tried the charbroiled oysters of the Trout Meuniere, I’m going to let you answer that question.

Pete: I’ll get to that in a moment but there’s one place every time I’m in north I have to go there first and I’ll tell you that here in a minute. What’s your favorite city visit?

Mike: Favorite city to visit, you know that’s great. We loved Italy and absolutely love Italy. My wife and I have been very fortunate and that we’ve been there several times. We love Rome. We love Venice. We love going down the Sorrento but if I had to pick a domestic city, the closest that I found to New Orleans in terms of the food, the climate and the people is Charleston, South Carolina.

Pete: Bingo!

Mike: Charleston, South Carolina, which just happens to be the home of our infamous publisher. It actually has nothing to do with that. The people there are fantastic. The food is fantastic.

Pete: I agree. I’d never been to Charleston until putting this book together for the Vantage Media and I immediately, immediately fell in love with the city and the food. Next question, Dixie beer or Abita beer?

Mike: I got to tell you, there are some diehard Dixie beer fans here but Abita is not far from me. They actually brew it probably about 15 miles north of here. You know what, I will answer that by saying cold.

Pete: Here’s one for you, Court of Two Sisters or the Gumbo Shop?

Mike: I probably would be on the Court of Two Sisters more than to The Gumbo Shop. I would say Court of Two Sisters.

Pete: The Gumbo Shop is the place I go to first and foremost, I go in, I get a bowl of gumbo, the combination plate, and a Dixie beer. I’ve been doing that for years. I actually have the cookbook from the Gumbo Shop. Actually, my friend, I make a pretty mean gumbo. I make a pretty mean gumbo, I do.

Mike: Okay, well, I love it. I think I’m not going get much better than that. I really don’t. As a matter fact, I just had some last night Pete.

Pete: I have to make some. Next question, Neville Brothers or Harry Connick, Jr.?

Mike: You know, Harry Connick, Jr. has done a spectacular job. Once again, what a great ambassador for the city. He’s done a lot. I know after Katrina, he came back a lot out there. He actually started a Mardi Gras crew, the Orpheus crew which parades the Monday before Mardi Gras. But he’s given that a lot to the city but certainly, you’re giving me tough questions because the Neville Brothers have done a wonderful job as well. It’s just such a fine line difference here Pete. I got to tell you. You couldn’t have pick anything culture than those two.

Pete: Alright, we’ll move to favorite movie.

Mike: Favorite movie, oh my goodness. That’s really tough. I am a big Rocky fan. I got to tell you that but there are so many, boy. You catch me on the spot here. Since I get off this call with you I know I’m going to say, boy why did I have to say this one but suffice to say, I really like that. I like the tenacity. I like the perseverance. I like the consistency, which is what it takes.

Pete: Here’s one, Jimmy Fallon or Johnny Carson?

Mike: Johnny Carson. Here’s the thing. I’m glad you brought him up because one of the greatest gratitude markers in the world, Johnny Carson. Why? Because he engaged and connected in a way that you wanted to spend time with him like an old friend each night. How many people stayed up until midnight each night and the next the morning and say why I stayed up and watch Carson last night? I know I got to go to work today, right? Because of the way he connected with people and I got to be honest with you. At this point in my life, I’m not staying up that late watching Fallon. I get up very early so I probably stayed up and watch Carson a lot more than I do Fallon.

Pete: I’m a big Carson fan and I’m also a big Fallon fan but I don’t stay up and watch Fallon. This thing called Hulu, I get on in the elliptical in the morning and I’m watching last night or a couple nights’ episodes of Fallon. All right. Last question, what’s the one thing on your bucket list that you would like to accomplish first?

Mike: It’s something I’m not going to be able to accomplish in the next week, the next month, or the next year and that is to take everything I’ve learned and just to help as many people. The whole process of writing this book, Pete, for me has been transforming in that I thought initially that I would just going to share an idea or two with people a story that can help them in their lives. But you know what I found is that it is so broad in my perspective because as you mentioned earlier, I’ve realized just how much gratitude transcends all industries that deal with people. I can’t answer that fully because I don’t know what God has in stored for me tomorrow to be quite honest with you. All I know is He’s laying the path, He’s getting it ready, and I’m ready to help Him do what we need to do.

Pete: I will say that’s probably the best answer I’ve ever had on that question. So Mike, tell our audience one is how they can contact you, your website, what you’ve got on your website and how they can get your book?

Mike: Sure, they can contact me, phone number 985-705-1824. They can go to my website, which is gratitudemarketingbook.com. Order the book. Once they order the book and have a chance to read that book, what I would appreciate an Amazon review. I would appreciate sharing that book with the organization and hey, I am open for speaking and will get on a plane and go anywhere that folks are open to the message. You know, the reality of it is that we’ve got so much to give back to people and as I said that’s a huge mission of mine so I’m a big believer in sharing is caring. Give me the opportunity to share.

Pete: Mike, I can’t thank you enough for taking time. This has been a wonderful conversation. It’s made me think in a couple of different directions and I’m sure it’s making in the audience think about things just a little bit differently today for a better tomorrow. So thank you again my friend.