I received a message from an Australian accountant the other day. The message went something like this:
Hi David,
Just some feedback from my Partner in business (an old school hardworking now moving to retiring not the easiest lady to impress).
You made it easy the questions that came back were of calibre and clearly indicated that you had certainly looked at this in depth and knew what you were looking for.
All of this for an amazing price. Be proud David, your organisation rocks!
He then led on with:
A marketing idea for you might be to older accountants – extend your working life by 10 years plus – have your work professionally done for you and reap the returns – do the numbers – 60K earning on a 6% return = 1,000,000 investment on the 2% that you get on your money in retirement its $3m – just an idea from a 51 yo battered systems accountant 🙂
So we exchanged further emails about this marketing idea he’d shared with me. As I mentioned to him:
A $3 million investment (let’s say 2 Sydney terrace houses), will earn you $70,000 income, which after expenses and tax will leave you with about $38,000, which is about 1.25% income, excluding capital gains. Whereas $3 million in the bank gets you 2.5% these days, with no capital gain. For most older accountants they don’t have large chunks of cash sitting around, so buying a couple of terrace houses (excluding purchasing and selling costs) is outside the bounds of most normal accountants. It’s hard enough these days just to pay the mortgage on one house!
He responded with:
Hi David I pulled the 6% out of my “knowledge” – I made it up as a conservative 3 times what you would get from a good cash rate and maybe what you would get on the share market in a return. My point was staying with your practice for a few years longer (maybe even a decade) and you earn 5K per month – 60K per annum – its like having a 1,000,000 invested in the share market while you are still earning it. The major motivation for leaving an accounting practice for retirement is that its a hassle to run staff (and their six personality disorders per day per person) where you guys can justify advertising – add $1,000,000 to your retirement (semi retirement) portfolio, keep mentally active and reduce or remove stress by using your services. Just an idea makes perfect sense to me.
I didn’t have much to add to what he was saying. It made perfect sense to me.
Keep your best clients, send the work over to Odyssey. Remove stress while at the same time avoid staffing issues (in Australia or offshore), and work when you wanted and where you wanted. Keep mentally agile and engaged, which seems to be the secret of longevity post retirement.
At the moment $5k a month would seem to be 1 or 2 compliance jobs a week. With Odyssey completing the work you’d expect a couple of review hours a week, and maybe meeting with clients. So maybe ½ day per week. And for this you end up with the equivalent of a $1m asset working for you.
Working in this way gives you the advantage of keeping your practice going a little longer, with Odyssey providing the quality . Keeping a smaller business going is a lower risk than just selling and hoping things go well in retirement. This is about pushing towards a work life balance focused more on life than work.
