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Chris LoCurto

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April 17, 2012

When It’s Time To Fire Your CPA!

April 17, 2012 | By | 68 Comments">68 Comments

CPAs, as a whole, are a necessity for many businesses. I have some personal friends who are CPAs. They  save companies a lot of money in taxes and time. But every now and then, you get one who doesn’t know what they are talking about. They see one aspect of a situation and never stop to consider the whole.

Recently, I had a conversation on this very subject with one of my Facebook friends.  It’s below.

Chris- I should know this by now, but can you give me some backup? I want to run some numbers by you:

  • 35-year-old
  • $100,000 emergency fund
  • $273,000 retirement ROTH (120 of that in kids’ college fund)
  • $200,000 in other mutual fund investments
  • $36,000 on hand in bank
  • No-debt and mortgage left is $417,000 (We have paid it down from $750,000, but the house is now appraising at $650,000.)
  • Husband’s salary is $357,000 and mine is $125,000, but we may adopt soon and I may be at home, so I don’t want to include that amount) 

I want to use the $200,000 to pay down the house, then pay about $15,000 (at least) a month on the mortgage until it is paid, and then pay that $15,000 back to the mutual funds. Our financial planner/FPU teacher wants us to keep the house payment as a tax write-off and is concerned about removing the $200,000 because it is making 10% a year. We just refinanced with Churchill Mortgage at 3.85%.

We would be even further, but we got our pants kicked last year from my business tax stuff that I thought was properly managed. That’s done now. We paid the IRS in cash. Our financial planner also suggests we move instead of paying it down. We own second house, which my office is in, outright.  It is about $100,000. My nanny and a missionary live there.

Your planner is a dork. With 4% interest and 10% return, you’re netting 6%– not including the amazing amount of extra money you’re paying in interest for not paying it off. Paying it off early is equal to getting a GREAT return. On top of that, you’re giving the bank THREE TIMES the amount of money, so you don’t give it to the IRS. Fire this dork and get someone who can count.

Does all of that make sense?

Thank you Chris I appreciate you :) I am also laughing and I needed that. Yes, it all makes sense, and I KNOW that!!!!! He will get the money back in possibly less than a year, too. Just let me pay off the house!

Question: When have you seen an “expert” giving the wrong advice? 

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  • http://www.epreferreds.com/ preferred stocks

    After a long term of time have to planning for return back to the work again.

  • http://www.epreferreds.com/ preferred stocks

    The “consultants” in my industry were encouraging home owners to borrow the max amount possible on their home – which ultimately lead to “equity stripping” When consultant advice defies common sense, logic and our gut intuition, it is highly susceptible to failure

  • LouiseThaxton

    Oh yeah – the so called “experts” that lead in the “mortgage melt-down” – I have seen it all.  The “experts” in my industry were encouraging home owners to borrow the max amount possible on their home – which ultimately lead to “equity stripping” – which of course now – has lead many to be upside down on their mortgage…… 
     
    Always have to be careful with the “experts”!
     

  • http://www.epreferreds.com/ preferred stocks

    It is unfortunate. At times, expert advice prove to be wrong. When expert advice defies common sense

  • http://www.lifeofasteward.com/ Loren Pinilis

    Wow, they’re in pretty good financial shape. Good for them. I’m personally working hard on paying down my mortgage – hopefully sooner rather than later!

  • http://www.epreferreds.com/ preferred stocks

     It is unfortunate. At times, expert advice prove to be wrong. When expert advice defies common sense, logic and our gut intuition, it is highly susceptible to failure

  • abnpaul

    Chris, thanks for validating what I’ve always known! 

  • cabinart

    “Your planner is a dork!”? Chris that is hilarious! Why don’t you tell us what you really think?
     
    My CPA expressed a bit of dismay when we decided to pay off our house. He thinks we are poor and stupid and can’t figure out why we are happy! 

    • http://ChrisLoCurto.com ChrisLoCurto

       @cabinart HAHAHA….because he only knows what he’s been taught, and hasn’t challenged the status quo. 

  • http://TeamEagleRevolution.com/ BryanHart

    Wow.  My wife and I have led two FPU classes so far, and I just can’t believe an FPU teacher is advising this. Can we kick this teacher out of our “cool guys” club?  I hope the more we spread around common sense financial planning, the less of this “smart” investing we’ll find.

    • http://www.bluebridgecomm.com/ JoelFortner

       @BryanHart My wife and I have done the same. That detail didn’t escape me while reading!

  • Domerskee

    Great reminder that we are still personally responsible.  We need to be watching over our investments even thought we have someone else advising/ managing things for us.
    Reminds me, I am way over due to have a sit down with our insurance agent to go over our policies …

  • LanceCashion

    Last Friday I had a new client (call her Jane) come to me in crisis mode.  Jane was rushing around trying to make a last minute IRA contribution before she left town.  We were in the process of transferring her retirement assets from an advisor who she’d only spoken with on one occasion in 5 years (YEARS!!!).  Jane had been losing money for 5 years and NO ONE called her.  To top it off, Jane’s CPA nearly cost her $10K in unnecessary taxes! 
     
    Two weeks ago, after reviewing Jane’s statement, I instructed her to call her CPA and ask about making a contribution to her SEP-IRA for 2011 (BTW, I cannot give tax advice).  After a delay getting back to Jane, the CPA had an ‘oh yeah’ moment and said that she could make a contribution for 2011. Meanwhile, Jane noticed a discrepancy on her filing. Jane’s CPA missed the opportunity for a contribution (and deduction) and made a huge error on Jane’s tax filing.  If you add the piss-poor treatment from her ‘advisor’, I end up being a rock star (by simply doing my job).
     
    As fate would have it, I was Entreleadership in San Antonio last Friday and Dave told the story of an incompetent CPA who told their client to go buy a bunch of unnecessary crap for their business to get a tax deduction.  I was chuckling to myself b/c I knew what Dave was going to say next…. “Fire your CPA!” 
     
    I gave Jane the same advice… BTW, her advisor fired himself.  Thank you very much. My wife gave the best advice ever… “ALWAYS trust but verify”.  I urge everyone to do the same.  You need to know your tax liabilities and you MUST know how much it costs to own your retirement/investment portfolio (many fees are left off your statements).   If something smells funny… there may be something funny going on with your money ;)

    • http://ChrisLoCurto.com ChrisLoCurto

       @LanceCashion AAAAAAAAAAMEN!!!

  • Justin

    Lets see how many unlikes i get with my comment. 
    First, this was a financial planner/FPU teacher.  Not a CPA.  Second, this goes against Dave’s teachings.  She is moving Step 6 to step 2.  If you look at the comment, she wants to adopt.  She wants to stay home.  So if she pays off the home, the fear of debt is gone and she can.  Instead of paying off the house if 4-6 years, she wants it paid off in a year and a half. 
    So the FPU teacher said you have too much house and can’t afford it because the payment is half of you salary.  You should move.  She says i want it and you don’t know what you are talking about.  So she is going to give up her retirement to stay in the house.  Then in a couple of years complain that they do not have any retirement, but they love their house.

  • http://uma-maheswaran.blogspot.com/ uma_maheswaran

    Being an Indian CPA, I am afraid this post for me !!!
     
    Setting aside jokes, I can relate your message from this post.
     It is unfortunate. At times, expert advice prove to be wrong. When expert advice defies common sense, logic and our gut intuition, it is highly susceptible to failure

    • http://ChrisLoCurto.com ChrisLoCurto

      @uma_maheswaran Spoken like a CPA who knows what he’s talking about!

  • http://www.lilykreitinger.com lilykreitinger

    We fired our financial advisor of 5 years after we shared with him that we had gone through Financial Peace University and wanted to take control of our investments for retirement and college.  He got  a little defensive and said “Some of the stuff that Dave Ramsey says is OK but…”   We contacted an investment  ELP through our FPU Coordinator (shout out to Sara Sauer, tax ELP!)  and he is awesome.  He helped us set our financial goal for retirement and backtrack to figure out how to invest to reach that goal.  Our other guy is great as a person, but would never disclose how much money he was charging us to manage our portfolio.  He always tiptoed out of that conversation.  He called after he received a letter informing him that we had transferred our funds out of his hands and my husband explained to him that we found someone that is in line with our goals and values.  We didn’t want to have the “You’re fired” conversation, but we definitely do not want to compromise our financial goals. 

    • http://ChrisLoCurto.com ChrisLoCurto

       @lilykreitinger Wow. Not willing to openly share how much he was charging you. Yep. We’re outta here!!

  • livebeyondrich

    Hi Chris,
    GREAT story! I ran into a college councilor the other day that encourages people to go to college no matter how much it costs. He was all about encouraging kids to take out student loans to get college done with early so they don’t put it off. While I admired his get it done and MOVE attitude, it made me shake my head how most people think we need to take out loans to get what we want in life. We used to fall for this belief ourselves.
    On my way to give a talk about the ability to go to school debt free the other day, I ran into a colleague and we starting talking about college loans. My goodness,I have never been in a elevator where so many strangers turned around to pipe in. I was definitely in the minority about being able to pay for college with cash. During my speech, I noticed several surprised looks at the beginning, however, by the end, people were shaking their heads to agree that kids starting out their lives in debt (the average school debt kids carry is ~ $25,000) is just plain crazy. I have been suggesting Zac Bissionnete’s Debt Free U book like crazy lately and even gave my only copy away to a single mom who was inspired after hearing me talk about it.
    I told the college councilor what the McDonough college plan would be for our four kids – paying cash while working their butts off while in a community college and then a two year instate college while we helped as much as we could without any of us going into debt.
    Live Beyond Awesome,
    Jen

    • http://www.bluebridgecomm.com/ JoelFortner

      Swimming up a river is hard but I’ll take it any day over the waterfall.

      • cabinart

         @JoelFortner Great analogy – thanks, I’m planning to borrow it from you!

    • http://ChrisLoCurto.com ChrisLoCurto

       @livebeyondrich Isn’t it funny how everyone’s an “expert” on how you can’t go to college debt free?! It cracks me up that they are so strong with their opinions, and then you show them just how it can be done, and they are stunned. 

      • livebeyondrich

         @ChrisLoCurto VERY true Chris! It cracks me up too. I am not too surprised anymore when it comes to finances and people. Some of the most savvy people who have MADE SURE to explain that they never got into debt problems like we did have in fact quite a bit of debt. Funny that “experts” don’t consider college debt as being debt. I love Zac’s book to refer to – very awesome!!!
        Keep up the awesome work Chris!
        Jen

    • http://specializingintheimpossible.wordpress.com/ Laura Johnson

       @livebeyondrich
       It’s ridiculous how many people insist a person cannot go to college without debt! I graduated after 4.5 years with no debt–worked my butt off. I saved up all my money from my pre-college jobs and that paid for the first year. I had a couple scholarships, held a part time job during the school year, worked 65-70 hour work weeks during the summer, and my parents were able to help a bit. I had a roommate who took a loan out for everything:  classes, room and board, meals, books. She graduated with 100,000 in debt and a degree she wasn’t going to use. Was the college experience really worth that much? Especially with how that debt cripples the next however-many years of a person’s life? I remember being in a college class where the professor took a day to explain how interest was going to affect students’ college debt over the next several years of their lives. One of the only times I’ve literally seen several people’s jaws drop.
      Too bad most parents don’t educate on the whole debt thing. But I’m sure all of Chris’s readers do ;)

      • livebeyondrich

         @Laura Johnson Laura, CONGRATS!!! You are awesome girl!!! 
        Wow, that is sad about your friend. It makes me angry that kids are encourages to go into debt before starting out their life. Love that a college professor talked about college debt – wow, that is like a banker talking about eliminating debt almost. ha ha. 

    • http://hardandsimple.blogspot.com Skropp

      @livebeyondrich I wished I’d talked to you before I acquired my $40k in student loan debt….

      • livebeyondrich

         @Skropp  @livebeyondrich I think we all wish we would have done something different in our younger years. (:  The good news is that you are not alone and it is possible to knock that debt out of your live. Still is a bummer though when you think of $40k – at the time, I am sure 10k a year didn’t seem like much. That stuff really adds up quick.  

        • http://www.bluebridgecomm.com/ JoelFortner

           @livebeyondrich  @Skropp I could have done several things different in my “younger years.” =)

        • http://hardandsimple.blogspot.com Skropp

          @livebeyondrich It seemed like a lot at the time…but everyone says its necessary, do you do it. Now I get hundreds of dollars in payments every month :)

        • http://hardandsimple.blogspot.com Skropp

          @JoelFortner @livebeyondrich Haha. I agree there! And in 10 years I’m sure I’ll identify some from this time in my life too!!

  • http://www.bluebridgecomm.com/ JoelFortner

    “Expert” is relative.  As a marketing coach, I consider myself an expert in marketing.  The thing is many marketing coaches know a lot more than I do.  They’re experts.  And many marketing coaches know less than I do.  They’re experts, too.  Maintaining some healthy skepticism about “experts” is a good thing.  Experts should have to and expect to work hard to build trust and rapport so prospective clients can make the best decision about which “expert” is best for them.

    • http://www.lilykreitinger.com lilykreitinger

       @JoelFortner Great comment. BTW, I realized your comment is worth 35 points and mine 0… how did that happen?

      • http://www.bluebridgecomm.com/ JoelFortner

         @lilykreitinger Points indicate how many people have Liked comments.  I comment on 1-2 other blogs that use Livefyre and some of those comments have been liked.  Make sense?

        • http://www.lilykreitinger.com lilykreitinger

           @JoelFortnerI learned that today… you’re more liked than most of us :D

    • http://ChrisLoCurto.com ChrisLoCurto

       @JoelFortner I think the great thing about your expertise, is you’ve shown me HOW you’re right. Not given me advice that you can’t back up. 

      • http://www.bluebridgecomm.com/ JoelFortner

        Well thanks dude!

    • epicenterone

       @JoelFortner Yes yes yes! The title ‘expert’ should be given to you because you’ve earned it and the people you serve decide to use it when they refer to you.  Even then, great care required! 

      • http://www.bluebridgecomm.com/ JoelFortner

        Thanks Aaron!  That’s really nice.

    • http://specializingintheimpossible.wordpress.com/ Laura Johnson

       @JoelFortner
       I trust you as an expert :) 

      • http://www.bluebridgecomm.com/ JoelFortner

         @Laura Johnson So I fooled you, too?!!  Ha!

        • http://specializingintheimpossible.wordpress.com/ Laura Johnson

           @JoelFortner Easy to do over the internet ;)

    • cabinart

       @JoelFortner I was looking for a local web designer. All 3 I found called themselves “experts”; 2 had glaring typos on their front pages and the other had so much animation that the site wouldn’t load. (I’m an expert at spotting fake experts!)

      • http://www.bluebridgecomm.com/ JoelFortner

         @cabinart Sounds likes you found some! That’s terrible.

  • tbric1

    We fired our insurance agent of 15 years a few years ago.  He would come with the renewal paperwork and go on about how lucky we were that someone would insure us.   I was sick of paying an astronomical amount and had another insurance company quote the business.  CUT OUR COST BY 75%!!!!  Unfortunately we now keep close tabs on  our new insurance agent.  So far, they have been very good.

    • http://ChrisLoCurto.com ChrisLoCurto

       @tbric1 You gotta be kidding?! That’s a great example of why this is so important!!!

  • http://hardandsimple.blogspot.com Skropp

    I know we hire experts because it’s an area we may not be expert in, or not have the time to worry about… But I think we do a disservice to ourselves if we don’t still pay attention to what’s going on, use common sense, and ask questions.
    A true professional will not be offended by questions and will be open to 1. Explaining why they’re doing what they are and 2. Exploring other options and suggestions you have.
    Anyone not willing to do so is, in my opinion, not a true professional and simply hiding behind credentials.

    • http://ChrisLoCurto.com ChrisLoCurto

      @Skropp Aaaaaamen! Especially the part about being willing to explore other options!

      • http://hardandsimple.blogspot.com Skropp

        @ChrisLoCurto My view is, anyone can push one certain strategy or idea. That doesn’t make you an expert or a professional. An expert or professional has the breadth of knowledge to give his professional opinion, but is confident enough in his expertise to entertain ALL ideas and make the decision that is best for the client.

        • http://ChrisLoCurto.com ChrisLoCurto

          @Skropp Preach it!

  • epicenterone

    Boy don’t get me started on CPA’s! 
     
    You got me thinking about being sure that I never be ‘that guy’ giving the wrong advice to someone. Know what I mean? Or to work hard and make sure you’re always delivering on your promises. 
     
    Our CPA has been hard to communicate with, and we’ve had to ‘help’ them to keep their commitments with us. They are a small Christian firm, so we’ve been working with them for a few years based on that. It seems that they do the work, but it’s just not always as tight as it must be.
     
    There have been times where we have wanted to walk…lack of communication, having to follow up multiple times for info, etc – but then I think to myself that I bet there have been times my own clients have felt frustrated with me – and I know there have been times my clients have ‘helped’ me to comply with things they were needing from me. Helping me to grow, does that make sense?
     
    I just don’t want to pull the plug on someone, when maybe what they need is grace. I know I don’t want someone to pull the plug on me, when all I need is grace. 
     
    Sorry for thinking out loud here….what would you do in this area?
     

    • http://hardandsimple.blogspot.com Skropp

      @epicenterone I think there’s a time for understanding, but there also has to be improvement. It’s a business relationship, not charity. At some point you’ve got to see the problems fixed and get the results. If you don’t get them and contine to let it slide you’re not only hurting your business, but perhaps also crippling them from improving because they aren’t forced to improve. Just my opinion, for what it’s worth!

      • epicenterone

        I agree Skropp – improvement must happen – even grace expects change to happen. I don’t think I have looked at it quite like that before. Thanks! 

        • http://hardandsimple.blogspot.com Skropp

          @epicenterone Glad it helped. I look at it like the story of the guy that tried to “help” a butterfly by cutting open the cacoon, thereby crippling the butterfly. If expectations are clearly set and agreed upon and are not met, at some point we gotta let them break out of that “cacoon” on their own. I certainly hope you arent their only client, so losing you shouldn’t ruin their business. And I would explain why you were going to try someone else, and if you’re so inclined, tell them you’re willing to sit back down with them in a year or two and revisit the relationship and see if it may be a better fit then.

        • http://www.bluebridgecomm.com/ JoelFortner

          Excellent advice in all of your comments here!

    • http://ChrisLoCurto.com ChrisLoCurto

      @epicenterone I’m with you. Being graceful is a must. I need it EVERY day!!! And I don’t mind you being graceful and helping your CPA, just not necessarily with your money. :-) That’s an area I don’t need someone making large mistakes like this guy did. Make sense? And I hope you always think outloud here!

      • epicenterone

         @ChrisLoCurto  I wholeheartedly agree man – thanks for your input and encouragement to vent weird thoughts in public! :) I will work hard to clarify our needs like Lily so nicely explained – and then hope for the best, expect the best…and be prepared to move on. You know, a lot of my reluctance to move to another provider is also a bit of fear of the unknown. The CPA we had before these guys was…well I have no idea why he managed to get the ‘C’ part in his job title. The guy was terrible. I’m scared of getting into that again cus down here, it’s really hard to find someone honest and diligent at the same time. :( 
         
         

        • http://www.lilykreitinger.com lilykreitinger

           @epicenterone  @ChrisLoCurto I hear you. Let me dig into my mental files and my address book and see if I can help you there!!

    • http://www.lilykreitinger.com lilykreitinger

       @epicenterone I’m with you there Aaron. I HATE conflict and will do anything to give people way more grace than what they need. Sadly, sometimes tough love is needed.  You don’t need to be mean about it, but it will help the other person see what they’re missing. If you deliver your message with compassion (pray before hand, that HELPS) and state the situation, how it affects you and what change you expect from them to keep your business, it will be a little easier.  Something such as “When I have to follow up multiple times for information, I feel really frustrated because it causes me to fall behind on keeping track of [x].  I want to continue doing business with you, however to do this our communication has to improve.  I would like you to update me [weekly, monthly,etc] and reply to my requests within 2 business days”  or something like that.

      • epicenterone

         @lilykreitinger Thanks Lily! That’s great advice for sure. I always find myself wondering…how much is too much before you need to act. But I think conversations like the one you laid out there for me is the perfect way to clarify our needs and expectations. If improvement doesn’t happen after that…well I guess it’s time for the tough love.  Cringe. 
         
         

        • http://www.bluebridgecomm.com/ JoelFortner

           @lilykreitinger @epicenterone I agree.  This is great advice I believe I may have to use pretty soon regarding an “expert” who has done work for me.  Boo.

        • http://specializingintheimpossible.wordpress.com/ Laura Johnson

           @JoelFortner
           And hopfully that “expert” of yours doesn’t read Chris’s blog ;)

        • http://www.lilykreitinger.com lilykreitinger

           @JoelFortner  @epicenterone It bothers me that everyone with a website calls themselves an “expert”…

        • http://hardandsimple.blogspot.com Skropp

          @lilykreitinger @JoelFortner @epicenterone
          Lily, is that your “expert”opinion? Haha :)

        • http://www.lilykreitinger.com lilykreitinger

          Of course not : )

        • http://www.bluebridgecomm.com/ JoelFortner

           @Laura Johnson I hope they do read it!

    • http://specializingintheimpossible.wordpress.com/ Laura Johnson

       @epicenterone
       Sometimes it seems harder to demonstrate “tough love” when the person/comopany is Christian. At the same time, I have to remember the label Christian doesn’t mean they’re good at everything…

      • epicenterone

         @Laura Johnson That’s great Laura – Christian doesn’t mean you’re great at everything. I KNOW that is true. And like what I heard somewhere in one of the Entreleadership podcasts – for some, working in or for a Christian org cannot be code for ‘I’m lazy and don’t have to be excellent.”  Yep.