When a CPA Firm Partner Retires

Moments That Matter

Getting partners to begin their transition toward retirement is a problem facing many CPA firms. Many partners are viewed as indispensable by their clients and they want to continue their engagement for as long as possible. In a perfect world, partners nearing retirement age will have begun to transition their client base to other CPAs, allowing up and coming partners to build valuable relationships and grow the firm. However, this is not often the case.

Things to Consider

If your firm has a partner who is nearing retirement age or who is thinking about retiring, make sure you have a plan in place to address the following concerns:

  • Revenue vs. Expense: Have you planned for the payout expenses incurred by a retiring partner? What kinds of Medicare supplements will you be paying out? Some firms obtain Life Insurance policies on retiring partners to help fund some of the retirement payments.

  • Client Service: After the partner retires, what will happen to their clients and who will take over? Sometimes the retiring partner was in charge of a niche market and additional training or a new hire with experience and the area should be considered.

  • Working after Retirement: Many partners stick around and work at the firm in some capacity after they retire to help oversee certain relationship aspects of a specific client. As a result, their tax status will change from that of a partner to that of a contractor or employee. It’s important to remain aware of these nuances.

Key takeaways

Sometimes, when a partner looks for ways to stick around and hang on to their clients, preventing the engagement from being handed off to another partner, it slows the firm’s admissions and partner growth. When this happens, colleagues can feel aggravated and navigating these obstacles can be a poor use of a managing partner’s time. It can also leave the retiring partner feeling mistreated or hurt.

However, if your firm is proactive in creating an open forum and safe space for the retiring partner to explore their post-career future and opportunities, it can help ease the tension of this transition. Give yourself and your firm peace of mind by encouraging the retiring partner to develop a post-retirement plan and playbook. Ask them to seek outside counsel from a career coach if necessary. A little prep work now will save your firm from a lot of painstaking, emotionally complicated work later. This is a big life event, and there is a lot to look forward to.

Plans that might help you

Planning for the next step

We understand this is a tricky time for all involved. Years of hard work and rapport building have gone in to building client relationships and growing the firm into what it is today. Protect the investment of all that time and explore some of the resources we’ve created to help you plan for retirement or the retirement of someone at your firm.

Moments That Matter