If you want to know how to attract younger, forward-thinking CPAs to accounting and financial planning, just ask Amy Sonstein, CPA/PFS. Amy is principal of Sonstein Financial Group in Marlton, New Jersey, a suburb of Philadelphia, where she works with her clients on a full-range of strategic personal planning, business planning, and estate planning issues. Planner recently sat down with Amy to find out a bit more about her practice, her investment philosophy, using life insurance as planning tool, and her advice on how to recruit younger CPAs to become interested in all aspects of planning.
Planner: What do you think makes your practice unique?
Amy Sonstein: Cash-flow! Other advisers focus mainly on a client's balance sheet or net worth; their advice is centered around accumulating assets, sometimes regardless of the effect on cash flow, and they tend not to even focus on cash flow until the client is about to retire. We understand that cash flow, or the ability to produce income, is the client’s most important asset throughout life. Their balance sheet is only supported by their ability to produce income during their working years. If cash flow is interrupted, there is a ripple effect that can seriously damage a client's financial life. Instead, we strive to ensure that a client's cash flow is never interrupted throughout their life.
We also understand that a common struggle for many people is the inability to strike a balance between current consumption or spending, and future consumption or saving and investing to spend tomorrow. Yet, there are really only four things clients can do with their money: spend, save, invest and give it away. We excel at helping clients find that balance between enjoying life today, while still saving and investing for tomorrow.
Planner: What is your investment philosophy?
Amy Sonstein: Safe and steady wins the race. This is not to be confused with slow and steady. Many clients are taught that in order to achieve greater returns on their investments, they have to increase their risk. We teach our clients to save, first, and then invest. We educate our clients on how money can work more efficiently and show them unique strategies to maximize their wealth, while at the same time minimizing their risk.
Planner: CPA financial planners often take different approaches when they implement personal financial planning into their practice. When you first started offering this, what kind of strategy did you use and how did you choose your business models?
Amy Sonstein: At the time I first explored a career in financial services, I was a forensic accountant and very happy with my career. However, I became a client of the firm I eventually went to work with and was so impressed with the firm’s philosophy of "protect, save, and invest" that I actually decided to change my career to help people in the way our adviser helped us.
Our first adviser, who later became one of my mentors, helped me to understand that money is not simply the result of a mathematical equation—sometimes one plus one did not equal two. He showed me that I did not have to sacrifice protection in order to enjoy and invest my wealth. He educated me about how the profession really worked and whose interests were commonly being served.
I was so impressed with this "uncommon" philosophy; not only did my husband and I become clients—I joined the firm shortly thereafter. From top to bottom, everyone at the firm was about helping people, first, and not just selling products. When my mentor would come by, he would ask me “how many people have you helped today?”—not how much have you sold. I was trained to take a holistic approach to finance centered on providing clients with maximum wealth enjoyment through better cash-flow and quality of life, maximum asset protection, minimal risk, and striving to do that in a way that doesn't cause the client to enjoy less money today.
Planner: We understand you offer holistic and strategic planning services to families and businesses. Tell us what that’s all about.
Amy Sonstein: Most people use traditional financial theories and conventional wisdom as a reason to take on increased financial risk. Instead of putting your assets at risk, we consider your complete financial picture and put your financial security first. I created a unique planning process called The Financial Balance Process™ designed to create harmony between your assets, liabilities, protection portfolio, and cash flow management.
Through our comprehensive process, our clients will receive a thorough review of their current protection and wealth portfolios. After a detailed analysis of our clients’ current plan, we share financial and economic principles to educate them on the fundamental ideals of successful financial management. Then, we integrate those elements into a cohesive and coordinated strategy. We use state-of-the-art technology to provide our clients with economic verification of the strategies they implement. This process encourages clients to make financial decisions that promote an efficient flow of money between assets, which helps minimize risk and maximize benefits so they can achieve maximum wealth enjoyment.
Planner: Your firm uses The Living Balance Sheet® to help clients plan for the future. Can you give us an example of how it helped one of your clients?
Amy Sonstein: The focus is on uninterrupted cash flow. The Living Balance Sheet helps provide a unique level of financial organization by bringing to life clients’ assets, liabilities, cash flow, and insurance. One of the unique designs is the manner in which cash flow supports the balance sheet and insurance protects it. All clients enjoy their own personal, secure website with a consolidated, up-to-date view of their complete financial picture. Each time clients log in, the website displays current balances and transactions.
The Living Balance Sheet helps them focus on the interdependence of cash flow, protection, and their balance sheet, yet I find that clients often have not been educated about how all these areas of finance work together. One example I can share is through this macro view. I identified with my client that his greatest asset was his ability to produce income and generate business for his firm. The Living Balance Sheet aided us in determining that not only was he under-protected against the loss of his income in the event of illness or injury; we were able to further study the impact on his ability to save during a disability event. As a result, I implemented additional disability insurance protection. Unfortunately, he needed to collect the benefit within a few years. Still, he was able to save and pay for college during this experience.
Planner: You recently taught an AICPA Web seminar, The Economics of Life Insurance, in which you provided other planners a set of strategies for insurance planning. What were some of those strategies and can you explain them in brief?
Amy Sonstein: Initially, I shared with the audience how to determine the amount of death benefit protection a client should own. I discussed the importance of providing our clients with sufficient wealth in order to replace the insured’s income annually and in perpetuity. I then transitioned into the types of life insurance available, which commonly includes a few different types of permanent insurance as well as term insurances. During that conversation, we studied the true costs of owning each type. I examined two common thought processes: (1) term life insurance is “always the cheapest” way to acquire protection over the course of a lifetime, and (2) you won’t want or need to continue to own insurance during retirement.
In examining the cost of different types of insurances, I demonstrated to the audience the concept of lost opportunity cost that must be considered when analyzing the cost of term insurance. Lost opportunity cost is the value which would have otherwise been received by clients had they saved or invested the same money rather than having spent it. The expectation for most people is to outlive their term life insurance. When a client owns permanent insurance, such as whole life insurance, the client’s expectation is to own life insurance forever. When clients expect to outlive their term insurance and assuming they do, the insured has now paid premiums for a benefit that will never be received.
I then calculated through a case study, using hypothetical rates of return, the amount of money the insured would have had at the end of the term had the premiums been invested rather than just spent. I then projected how much money the insured would have, had the investment account continued to grow from the end of the term until an assumed retirement age. When lost opportunity costs are factored in, term life insurance can potentially be expensive for the insured because it impacts the insured’s future balance sheet and future cash flow. I further explained that I often advise clients to own term life insurance as part of their life insurance portfolio; however as an adviser, I educate my clients on the potential lost opportunity cost of outliving the term and develop strategies to recapture this impact on their wealth.
I then examined why a client may want or need to own life insurance during retirement. I discussed the common planning strategy for retirement, which is to hoard your nest egg and attempt to live off of the income it generates. Often, clients are worried about outliving their assets and having the ability to leave a financial legacy for the people and organizations they care about. I then studied the cash flow strategies of “hoard and pass” versus “consume and replace.” When clients hoard nest eggs in order to pass them on, their cash flow and lifestyle is limited. Their cash flow becomes dependent upon the rate of return and is susceptible to tax law changes, inflation, and life events during retirement. They also potentially limit their ability to take advantage of strategies that can guarantee income, such as annuities, pensions, and reverse mortgages and strategies that can increase annual income by spending down both principal and interest. These strategies which increase wealth enjoyment during the client’s lifetime can often only be accomplished when the client has a guarantee of wealth replacement to those they leave behind; that is, by owning permanent life insurance.
Planner: Your firm is on Facebook. What kinds of expectations do you have for your page with regard to gaining referrals and converting prospects to clients?
Amy Sonstein: While many advisers strive to build a referral-based business, we strive to build a business based on introductions. Facebook is a great way we can introduce ourselves to potential clients. They can check us out and see what we are all about. We feel it is important for people to get to know their professional before they ever make a decision to do business with us. Facebook is also a great way for existing clients to introduce us to other people they think may benefit from the work we do.
Planner: How much time do you spend maintaining your Facebook page, and what other social media are you on?
Amy Sonstein: Marketing is not my unique ability. Lauren DiFederico, director of Communications, and my husband, Jason Sonstein, JD, director of Business Development and Recruiting, plan and execute our social media strategies. We allocate about one to two hours per week to social media. This time is spent on Facebook and LinkedIn updating content, and letting people know about upcoming events and our monthly newsletters. I also am currently working with my team to develop a marketing strategy targeting women on Pinterest.
Planner: How do you think CPA financial planners can draw younger CPAs to their firms?
Amy Sonstein: A great start is having a strong social media presence and state-of-the-art technology, but it also requires creating a culture that puts the client first, yet is internally laid back, fun, and social. Our team enjoys each other’s company and we often laugh. Not only should you encourage your team to work hard and help them to find their passion in their career; you should also create a culture that encourages people to have balance in their life, pursue their hobbies, and put their families first.
Planner: You mentioned your husband Jason. How are you and Jason able to separate work from home?
Amy Sonstein: We are very lucky. We have the type of relationship that is based on friendship. We actually met in college and were best friends first. However, separating work from home is challenging because our business is what produces the cash flow to provide the lifestyle our family enjoys.
Truthfully, there really isn’t a way to fully separate the two; our business is our part of our family. The time we spend after the kids are asleep is some of the most productive time. This is when we brainstorm, innovate, and plan for our business’ future. However, I also use the time management system I learned from The Strategic Coach program I took for several years. We block off our free time on our calendars in advance and do not compromise it. We don’t work Friday afternoons or weekends and love to take family vacations more than once a year. We commit to being fully present at work—when at work—and fully present with our children at home.
Planner: If you were stranded on a desert island with access to only one kind of technology, what would it be?
Amy Sonstein: Does this desert island have Wi-Fi? If not, then I would choose my Kindle, pre-loaded with hundreds of books. I love to read both fiction and personal development books. This would allow me to grow personally and expand my ability to “imagine.” To be candid, as a mom of a seven- and a four-year-old, this sounds a little bit like heaven, but maybe only for a few weeks!
More From Amy Sonstein and Additional Resources
The Webcast, “Economics of Life Insurance” was presented by Amy Sonstein on September 25, 2013. Among other topics, Amy discussed the true cost of life insurance and how the type of life insurance owned affects your clients’ retirement lifestyle. PFP members may access the audio recordings and presentation handouts in the PFP Webcast library.
Advanced PFP Conference: The 2014 Advanced PFP Conference will cover insurance and retirement topics such as Life and Disability Insurance Strategies in Live Situations and Retirement Income Strategies. The conference will be held January 20-22, at the Aria Resort and Casino in Las Vegas, Nevada. PFP Section Members, inclusive of PFS Credential holders, and Tax Section members can save an additional $100 on the registration fee. An early bird discount of an additional $75 off the registration fee expires December 6, 2013. For registration information and to download a PDF brochure, visit the conference website. Don’t delay—register today.
AICPA’s PFP Website: Amy stressed the importance of education and communication. PFP/PFS members have full access to Forefield Advisor to provide clear and concise communication with their clients very effectively. Timely client email alerts combined with customizable presentations allow CPAs to help clients focus on the important decisions they need to make.
The Young CPA Network on the AICPA website: This offers insight into current professional issues, career tips, and networking ideas to encourage younger CPAs in the profession. Specialization in an area such as personal financial planning is an important part of a CPA’s career decisions. These resources might also help firms seeking to appeal to younger CPAs.
Social marketing guides: These are available for members in the CPA Marketing Toolkit. In addition, personal financial planning specific marketing information is available in the CPA Financial Planner and CPA/PFS Business Development Toolkits.