Getting Started with CPA ElderCare Services

By George A. Lewis

In Brief

Focusing on Client Needs

Sometimes it pays to look in unconventional places for new service opportunities, in underserved niches that draw upon a CPA's skills. ElderCare Services present such an opportunity for practitioners willing to spend the time and money to develop the practice.

ElderCare Services position the practitioner as the hub and coordinator of a variety of services that cater to the financial, medical, and legal needs of the elderly. The services individuals need as they age must be coordinated by an expert with the client's best interests at heart. The trust between client and CPA makes a CPA the ideal professional to oversee the necessary specialists.

Making the leap to providing ElderCare Services requires commitment and investment, but ElderCare can be just as profitable as traditional accounting services. Notably, the market for ElderCare Services will only grow as the U.S. population ages. Educational resources available from the AICPA can prepare CPAs to offer the services.

Over the last several years, the AICPA has made a concentrated effort to promote new assurance services and to get practitioners to start thinking "outside the box" in providing services to new and existing clients. CPA ElderCare Services have been of special interest to many small and medium-sized CPA firms, many of which recognize that their clients are getting older and need additional assistance in some of the routines of daily living. And many firms have been providing services to older clients over and above the traditional tax preparation and estate planning services typically provided by CPA firms. Unfortunately, since these additional services to the elderly are outside the box, practitioners have failed to recognize the value of ElderCare Services as a potential revenue source or have felt uneasy about charging older clients for services outside of the traditional accounting realm.

CPA ElderCare Services build on the trust between client and practitioner. Yet, many practitioners are still trying to decide whether they want to participate in this nontraditional service; they question whether it will be profitable and whether they will be able to develop a practice around it.

Committing the Firm

Unfortunately, one of the hardest sells a practitioner interested in ElderCare has to make is to the other partners and members of the firm. Practitioners are busy--many of them have as much work as they can handle, and they see ElderCare Services as risky and unnecessary. They fail to recognize that the marketplace is changing. Customers' tastes and needs are changing, and firms that fail to see this will suffer.

Unless all the members of a firm support ElderCare, developing the service will be an uphill battle. Partners and staff all need to know what can be offered and cross-sell the service. The best contacts for potential ElderCare clients are the partners and professional staff that meet with clients to prepare their annual tax returns. Yes, the development of a CPA ElderCare Services practice must take place during the busiest period of the year. Persons interviewing clients in connection with the accumulation of tax return information can assess whether an elderly person is approaching the need ElderCare Services and can afford a premium for the luxury of remaining at home despite becoming less and less independent. In other cases, children will confide to their tax preparer concerns about their elderly parents. So the members of the firm who will not necessarily be involved in the actual delivery of ElderCare Services will need to be familiar with them and willing to give information to their clients.

What commitments will the firm have to make to get into CPA ElderCare Services? Certainly, time and money must be devoted to train the personnel that will deliver and promote the service. As seen in the Sidebar, the AICPA has five eight-hour CPE courses on various aspects of ElderCare. All are presented as group study or self-study. In addition, the AICPA publishes CPA ElderCare: A Practitioner's Resource Guide, and Practitioners Publishing Company produces Guide to Providing ElderCare Services. ElderCare practitioners should have both publications in their libraries.

Some funds should also be allocated to the development of brochures or other material to publicize what the firm is offering. The AICPA has an ElderCare Marketing Toolkit that can be utilized to develop these materials.

Initially, there will be no need to employ additional accounting personnel or ElderCare specialists. Although some firms have hired a geriatric care manager or licensed social worker, most firms can make arrangements with such specialists to be available on an as-needed basis. In fact, such specialists should probably be hired directly by the responsible family members rather than by the ElderCare practitioner.

Deciding on Level of Involvement

CPA ElderCare Services envision the practitioner as the hub and coordinator of a variety of necessary services. The CPA provides traditional accounting services (bill paying, revenue collection, and deposit) but also acts as the eyes and ears of absent family members to assure that other providers, either ongoing or temporary, meet the environmental and health needs of the client.

Some practitioners are not comfortable with performing anything other than traditional accounting services in the ElderCare engagement. But without someone acting as coordinator and overseer, deficiencies in the delivery of services by some providers may go unnoticed. Market research has indicated that elderly persons trust "their CPA" with this responsibility. But if the firm decides to perform only traditional services, there are still opportunities in the CPA ElderCare Services bundle.

If a firm decides to offer the full range of CPA ElderCare Services, there are a number of ways to deliver them. One approach that some firms are taking is to establish a team of caregivers that can be called upon during an ElderCare engagement. Instead of giving family members a list of potential caregivers, the practitioner offers a package deal that includes particular specialists needed in a particular case. This team might include the CPA, an attorney specializing in elder law, a geriatric care manager or licensed social worker, a broker or investment manager, and any other professional that might be needed in a specific situation.

Although the author believes that contracts for services should still be executed between the family member and each specialist, the team approach builds cooperation and mutual support of various professions in a particular engagement and can also be an excellent source of referrals. The CPA can still act as coordinator and overseer but would not attempt to perform services for which CPAs are not traditionally trained.

Rather than handling them within the firm, like a tax or audit department, some firms have established separate corporations to handle ElderCare engagements. There are several reasons for this approach. If qualified, bonded sitters, cooks, and nurses are not available in the community and the accounting firm wants to offer these services as a part of the ElderCare practice, a separate corporation with its own insurance and bonding coverage may be desirable. Other firms feel that a separate corporation is necessary because of the uncharted liability issues involved in providing ElderCare. Firms that have been providing some form of ElderCare Services already without informing their insurance carrier or recognizing it as a professional service may want to consider the added liability risk.

Each firm should consult with its attorney to determine which course--department within the firm or separate corporation--is advisable, given the particular circumstances and laws of its state. In general, if the firm offers only traditional accounting services with supervision or coordination of other services, the practice can be conducted within an existing accounting firm structure. Other members of the care team should possess their own liability coverage. If the accounting firm is hiring personnel to deliver medical or housekeeping services, however, a separate corporation might be advisable.

Liability Issues

One of the fears many practitioners have is that the ElderCare engagement will expose them to liability that their professional insurance does not cover. Certainly, the litigation risks in this area are unclear. If the practitioner is negligent in the performance of traditional accounting services that are part of the ElderCare engagement, the risks are the same as any other CPA service. But issues such as whether the practitioner is liable for failure to spot and report elder abuse, either financial or physical, have not been tested.

The AICPA's ElderCare Task Force is working with the Institute's insurance carrier to include ElderCare Services in the professional liability policy made available to members. Each ElderCare practitioner, however, should make sure that the work planned in this area is covered by professional insurance. The practitioner should not just take an insurance agent's word on coverage; get it in writing. Some insurance companies, when initially approached, have been horrified, thinking that ElderCare Services mean the practitioner is suddenly going to start practicing medicine or social work. Certainly, this is not the intent of ElderCare. The practitioner should sit down with an insurance carrier, fully explain the service and what the firm is going to be doing, and make sure that risks are properly insured. One key is whether or not the insurance policy defines the practice of public accounting as all products sponsored and approved by the AICPA.

A clear and precise engagement letter detailing the exact responsibilities of the practitioner reduces engagement risk. Since every ElderCare engagement will be different, there are no standard engagement letters. Each one must be carefully tailored to the specific situation so that the family members understand exactly which duties are the practitioner's responsibility. Once all parties have agreed to the engagement letter, no additional services should be performed by the practitioner--barring an unforeseen emergency--until the engagement agreement has been amended to include the new duties.

Finally, as in any normal accounting engagement, the potential risks should be carefully analyzed prior to accepting an ElderCare engagement. If the practitioner feels that the reputation of any person involved in the engagement--whether a family member, attorney in fact, or another caregiver--is questionable, the practitioner should probably not accept the engagement. If the elderly person's family is split or if there is conflict between family members, there is greater chance of litigation from a disgruntled sibling or heir. In the divided family situation, performance of routine accounting services might be so risky that the practitioner might not want to accept the engagement. Also it is extremely important to determine that the other professionals employed on the engagement, either by the family (preferably) or through the practitioner, have adequate professional liability insurance.

How to Sell CPA ElderCare Services

ElderCare Services must be promoted softly and with tact. Hard sells won't work. Elderly people don't like to be pushed into drastic decisions. They don't trust the "used car salesman" approach. They may resent someone, even someone they have known for years, telling them that they are no longer competent to manage their own affairs.

Many elderly persons either do not recognize or refuse to admit that they are in need of assistance. Today's elderly population grew up in a society where independence was paramount. Asking others for help, even when it was needed, was considered a sign of weakness. Unfortunately, many ElderCare engagements start only when there is a crisis: a small stroke, a fall and a broken hip. If the practitioner has made known to elderly clients--and responsible family members--that the firm offers CPA ElderCare Services, they will be more likely to call when the need arises.

The AICPA has developed a marketing kit for publicizing ElderCare Services. The kit is included on a CD-ROM that can be used by any qualified print shop to produce high-quality advertising or brochures. The kit includes four print ads, with or without pictures, that can be used in newspaper advertising or firm brochures. Two of these ads target the elderly person and two target family members. In addition, the kit includes sample letters that can be used in a direct mail campaign. All of the material can be customized.

Firm brochures are one of the most effective ways to promote ElderCare. They should be prominently displayed in the firm's reception area and on the desk of each partner or staff member that has contact with clients, and might be placed with doctors, hospital personnel, area councils on aging, religious personnel, social workers, and other establishments that serve elderly clients. The purpose of such brochures is the same as for any other firm brochure: to make potential customers aware of the services the accounting firm offers.

There are various opinions as to the effectiveness of newspaper advertising of ElderCare Services. Some practitioners have run one or two ElderCare ads in their local newspapers and have been disillusioned when there was no immediate response. Since this product is new and highly specific, the lack of results within the day or week is not surprising. If print media are to be used, the practitioner should commit to a long-term advertising campaign sufficient to imprint firm and product in the minds of the community. A more effective advertising campaign would consist of a series of ads over an extended period in a publication specifically targeted to the elderly. The author is aware of one practitioner who is doing just that: an ad every two weeks in a publication targeted to the upscale elderly market.

Another marketing idea is the use of specific questions on the tax return information form that could lead into a discussion of aging and ElderCare. One practitioner added four questions to the standard information questionnaire:

* Do you have a testamentary will?
* Do you have a living will?
* Do you have a durable power of attorney?
* Do you have a medical power of attorney?

If the respondent's answer to any of these questions was "no," the practitioner instructed the client to get those documents executed so that the respondent could "get on with the joy of living" and not have to worry about being unprepared for unforeseen emergencies. The practitioner then concluded with the statement, "That is what I have done." This approach not only leads into a discussion of what the firm can offer in CPA ElderCare Services, but also avoids focusing on the elderly as the only ones who need to be concerned about these documents.

Finally, practitioners should not be afraid to get out into the community to make ElderCare Services known. Speeches, visits to some of the professionals previously listed, and other selling tools can be used effectively. CPAs are traditionally some of the world's worst salespersons. Practitioners have operated in compliance-related areas for so many years that the idea of trying to promote new products or services is foreign.

ElderCare clients will develop slowly at first. But as the population continues to age, more and more people will want to avail themselves of this service. Unfortunately, if they are not aware that the practitioner's firm offers such a service, they will turn to other providers.

Will ElderCare Services Be Profitable?

Few CPAs have first-hand experience of whether ElderCare engagements are profitable. The profitability of ElderCare engagements will depend to a large extent on a firm's attitude toward billing. If a practitioner expects low fees and bills accordingly, engagements will not be profitable. If a practitioner regards this service as another professional service and bills at or near standard per diem rates, engagements will be profitable. The target market is upscale and accustomed to paying fair prices for quality service. ElderCare represents a premium many are willing to pay for security and safety, of both person and assets, when assistance is needed. Fees can range from several hundred to several thousand dollars per month, depending upon the range of services rendered by the practitioner.

Few practitioners today can base their practice solely on ElderCare clients. More commonly, ElderCare engagements will offset some of the traditional accounting work lost to technology, consolidation, and similar changes in the marketplace. Like any other business venture, the practitioner should consider the potential market in the local community (age, wealth, or family size) when deciding how to invest in training and resources. Hiring additional personnel and investing heavily in advertising may not be advisable until the number of those that need and can afford ElderCare warrants it. Acquiring the necessary reference material and training, however, positions the firm to handle ElderCare engagements as they arise. Since many ElderCare clients will probably have some stature in the community, word of mouth from satisfied clients will likely be a substantial and valuable factor in developing the practice.

Can ElderCare be profitable? Yes. But engagements will have to be managed and billed just like a traditional accounting engagement.

Staffing the Engagement

Any partner or staff person that will be dealing directly with an ElderCare client should understand the needs of the elderly and be able to deal with them and the various caregivers involved as part of an engagement team. Trust between the elderly person and the ElderCare practitioner is of utmost importance; without it, the engagement is doomed to failure.

Clerical personnel that have no contact with the ElderCare client probably will not need any special training to conduct their portion of the engagement. But any staff person or partner who acts as overseer and coordinator of caregivers and has ongoing contact with the elderly client should have special training in understanding and dealing with elderly clients. In a normal tax engagement, this is not necessary: The practitioner just collects the information and prepares the return. But in ElderCare, the relationship is much more personal.

Fulfilling a Growing Need

The need for CPA ElderCare Services is a real one and will only grow as the population continues to age. To help further the growth of this new assurance services product, the AICPA has developed a marketing kit, a resource kit, and continuing professional education courses that specifically address ElderCare. Are you or your firm going to take advantage of this new opportunity to further the profession and, at the same time, render a public benefit to our aging population? *

George A. Lewis, CPA, is a retired partner of Broussard, Poche, Lewis & Breaux in Lafayette, La. He is chair of the AICPA Task Force on ElderCare and an ex officio member of the AICPA Assurance Services Executive Committee.

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