6 Questions Smart Rich People Ask Their Accountant - by a NJ CPA
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6 Questions Smart Rich People Ask Their Accountant

6 Questions Smart Rich People Ask Their Accountant

6 Questions Smart Rich People Ask Their Accountant

6 Questions Smart Rich People Ask Their Accountant

Over the last few years, I started tracking the types of questions clients asked me. I categorized clients into three relative categories: annual income below $50,000; income over $200,000; and everyone else in between.

Clients and potential clients with low income or net worth almost always asked a similar question: What’s the price of the tax return? That’s all they wanted to know.  Value is in the eye of the beholder, and this group primarily focuses on that question, which essentially provides very little value in the big picture.

  • The lower income/net worth crowd focused on questions around:
    • How much am I getting back?
    • How fast can you do it?
    • How cheap?
    • How soon can I get this refund?

“The sweetness of low cost is forgotten long after the bitterness of low quality.”

None of these questions really provide any value for the client.  With each client, I tried to put everything in perspective and have them refocus their attention on things that matter more (see below). This is easy to say, much harder to achieve.

  • The middle-income group was a mix. Some clients from this group asked the similar questions as above, and some who asked similar questions to the wealthy group. This group is mixed for the obvious reason that the range is pretty wide, although some folks in the upper end of that range asked questions similar to the lower income group.  However, it was much easier to sway these clients to think like the rich.
  • What interested me the most was the wealthiest clients. How these people utilized my services was telling.  Price was at most an afterthought; quality was demanded over speed, and the wealthy could care less about a refund. They were only interested in legally minimizing their actual tax liability and preserving their wealth.

I wanted to share some of my findings with you the six most common questions my wealthy clients have asked me over the years. There’s a lot of valuable information here. You might also want to start asking better questions, questions the richest people are interested in hearing the answers to. I challenge you to start thinking in these terms and start using resources around you wisely.


6 Questions Smart Rich People Ask Their Accountant

1.) Is there anything I can do to optimize my tax return? This is by far the number one question my wealthy clients ask me. Wealthy people know an experienced tax professional can tell a lot from a tax return.

 A tax return can be accurate without resulting in the lowest tax. Wealthy clients want me to use this information to build tax-reducing strategies that fund their goals. Some clients want ideas to improve the efficiency of their charitable giving. Others want to maximize the benefits of their business or investments. A completed tax return is a wealth of knowledge for an experienced tax professional. With the tax return as a starting point, serious wealth can be created with a few simple actions.


2.) Can I have a consulting session outside of tax season? The richest people in my practice want to speak to me at least once or twice outside of tax season. They know I am under the gun in spring as the deadline looms so they want a summer or autumn appointment where the stress level for me is lower.

Rich people don’t want a barroom conversation. They want a deep analysis of their situation. They come armed with pages of handwritten notes they want to cover. This is serious business. A thousand dollars of consulting can put $10,000 or more in the pocket of the client. That is a heck of a return on your investment and the wealthy are well aware of it.


3.) What do you think of this investment? A good accountant with decades of experience under the belt knows a few tricks when uncovering value. When wealthy clients want me to review an investment they want the bad news! They already convinced themselves it’s a good investment. Now they want me to punch holes in it. When they get my opinion, including the risks, they can make a better and more informed decision.

There are a variety of investments to review. Stocks and bonds are common. Real estate and businesses are also things I review on a regular basis. I run the numbers through the eyes of an accountant, looking for irregularities. In nearly every case I uncover something the client didn’t notice. Years of training will do that for you.  Wealthy clients want my advice and in situations like this defer to my judgment.


4.) How much tax can I defer? Wealthy people know taxes will take more than any other item in their budget if unchecked. Frugal people who say they don’t care about taxes are either lying or not as frugal as they want you to think. Overpaying taxes is still spending! Retirement accounts are a powerful first line of defense against taxes. The tax code offers multiple opportunities to tax shelter wealth.


5.) Should I buy this (insert overly expensive toy here)? Rich people have rich people problems and the only way to solve these problems is a brutally honest accountant.   Wealth sometimes puts stars in a young man’s heart. The expensive car, boat, vacation home, et cetera, et cetera, et cetera, looks like such a good idea when you are loaded. A smart rich person—one who will remain rich—knows to ask the accountant before signing the check. Accountants are deal busters. Sorry. That great idea will evaporate like the morning dew when the accountant looks over the top of his glasses at you.


6.) What’s the best business entity for me and how can I grow a successful business?

Planning the type of entity you want your business to be (LLC, S Corp or C Corp) can have dramatic effects on your bottom line as a business.  Discussing this with your accountant can unlock huge savings that you may not be aware of.  I’ve helped hundreds of clients register their businesses in New Jersey, and those that came with this question first are the ones still flourishing.   Related to this, I’ve had multiple discussions with clients on whether their business idea is a good one. We have spent hours analyzing the industry, potential earnings, costs, etc. to determine if it even is a good business before we get to the entity type.  Many people want to chase money when starting a business instead of looking to serve a need.  This is a huge mistake – fill a need a lot of people have, provide huge amounts of value and the money will come.

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