HCVT Chairman and Founding Partner Philip Holthouse | Lessons in Leadership

In this episode of Get Better Today, host Matt Mayberry speaks with Philip Holthouse, co-founder and chairman of HCVT, on the journey and leadership that propelled HCVT to become the 31st largest accounting firm in the United States. Phil discusses the early challenges of founding the firm in 1991, emphasizing the importance of deep technical skills, transparent communication, and agile decision-making. He reflects on navigating significant crises like the COVID-19 pandemic and outlines his collaborative leadership philosophy fueled by a culture of healthy debate.

Phil also shares the role of continuous learning and mentorship throughout his career, discussing influential books and routines that have shaped his professional journey. Looking ahead, Phil describes HCVT’s commitment to maintaining its boutique status focused on high-quality service and enduring client relationships.


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About Philip Holthouse

Phil serves as Chairman of HCVT. Under Phil’s leadership, HCVT has grown to become the 31st largest accounting firm in the United States and the Los Angeles region’s largest locally based CPA firm with more than 700 employees and partners. The firm is known for its deep technical skills and ability to address the most complex tax issues associated with business entities and high-net-worth individuals.

Connect with Matt Mayberry
https://www.mattmayberryonline.com/

Transcript

Intro

0:00

Hello everyone. Welcome to another episode of Get Better Today. I'm your host, Matt Mayberry Today, have an extraordinary leader, Philip Holthouse. Phil serves as chairman of HCVT. Phil co founded HCVT back in 1991 under Phil's extraordinary leadership, HCVT has grown to become the 31st largest accounting firm in the United States and the Los Angeles region's largest locally based CPA firm with more than 700 employees and partners. The firm HCVT is known for its deep technical skills and ability to address the most complex tax issues associated with business entities and high net worth individuals. I enjoyed talking with Phil about his leadership, about the early stages of building and co founding HCVT, thank you so much.

Matt 1:01

I want to start right in the very beginning when you co founded the firm HCVT in 1991. What was the backstory of how HCVT originated, especially with starting your early career at KPMG?

Phil 1:18

Yeah, I started working with the predecessor at KPMG, Pete Marwick Mitchell and Company, or Uncle Pete as we called it in those days when I was in college and then stayed with them for a number of years full time after I graduated from college, partly in LA and partly in their, their DC national tax practice. Really enjoyed it. You know, felt like it was a good start to the profession. You work for those large firms, you get a lot of exposure to. Bright people and great training. And then left Pete Marwick to go with a larger local firm in LA that had a bunch of Pete Marwick alums, so a number of people that I knew. And after I had been there for, uh, at that local firm for about seven or eight years and been a partner for several years, two or three of us decided we'd want to started our own Our own gig and split off and started a very small firm. So, uh, I think it was partly just, uh, uh, immaturity and thinking we knew how to run a firm better than the senior partners at the firm we were with. And, uh, and so we had a little bit of, uh, impetuousness about it. Um, but it ended up working out really well.

Matt 2:33

I would say so. I mean, I think right now, right, the 31st largest accounting firm in the United States, correct? Correct.

Phil 2:39

I think that's right. We bounce, you know, somewhere in the low thirties, depending on how many mergers there are going on above or below us, but yeah, the firm's grown much larger than we anticipated early on. And, you know, we have about 800 people in the firm today.

Matt 2:53

Amazing. Phil, what were you kind of mentioned that, you thought you could do it better than some of the senior partners, but what would really some of those, I guess, overcoming the fears, what were some of the fears and maybe challenges early on? in those early days of bootstrapping the firm and getting it to where it is now.

Phil 3:12

Yeah. And I'm not even saying, I don't know if I would say we were going to run it better, but I think we thought we were going to run a fun firm differently than the, than the firm we were with. We had some different priorities and different focus points at that time. I think the, the fears. were largely what risks it would impose on our family members. Um, the, the three partners that started the firm, all of our spouses were pregnant at the time, which was just kind of crazy. Um, and I was in Knight Law School. So we had a lot of, uh, other areas of, uh, of, of interest going on when we started the firm and the economy was a little bit shaky. In the early nineties in Los Angeles, we were, we did a lot of real estate work and that was not a particularly fun time for, for real estate owners. So I think it was kind of a combination of, would it be okay, uh, putting that kind of pressure on our families and what were the financial risks? Fortunately. Our spouses and other family members were as gung ho for it as we were. So that made it a lot easier. They were thinking, yeah, you, you, you, you're going to pull this off and we're okay tightening the belts in the short run. If it's going to be a more satisfying career in the long run. And so we had great. partners, uh, you know, at home as well as, uh, in the office and that made a huge difference.

Matt 4:36

is there a, what you would deem as maybe one of the toughest crisis that you've managed or had to overcome throughout your leadership journey leading up to now? And really what were maybe some of the key lessons of that crisis, if there were any?

Phil 4:53

I, I guess the, you know, the obvious crisis that, that comes to mind these days is COVID, uh, because it was such a curve ball for most of us, you know, one of those, black swan events where you weren't sure what was going on. And so I think when we came to that rapid realization with the rest of the country that, you know, this was going to be very different than a, uh, than a flu bug and decided to shut down the physical locations and roll everybody out to, to remote work. I think the, uh, the daunting part of that is. I think all of us felt like we were going to get to the other side of that canyon, but we just didn't know how deep and broad it was going to be. What we originally shut down the offices thinking we'd be back in a week or two. And then it, you know, weeks went into months. Um, the only other experience I can remember like that, that was very different for us to manage through is, is early in the firm's history. One of our young employees went on a, a trip for a, a birthday party. for some friends and was on a private plane that went down in Aspen, um, that, uh, that killed everybody on board. And one of our partners, I think it was Patty, our, our COO, um, was fielding phone calls from family members trying to figure out, you know, which plane this Eugene was on. And, uh, I think Patty went back into the office and found a fax. This was fax days rather than email days on his desk, indicating that it was the same charter plane that had gone down. And then she had to relay that back to the, to the guy's parents and just trying to figure out how to process that with a, with a pretty small firm in those days where everybody knew each other. Um, it was, uh, that was a, that was a really tough part to, to, to manage through because we just didn't have a script at all for it. It wasn't something that was ever anticipated that we would have to deal with.

Leadership and Mentorship

Matt 6:59

That's, that's tragic. Phil, When I had the great privilege of being with you recently, one of the things that really stuck out to me specifically about your leadership, because it is very, it's very glaring, especially with somebody with the successes that you've had, the accolades that you've had, and quite frankly, the experience that you have, but really a curiosity for always learning more. and for having this mindset of becoming a lifelong learner, it was very clear and very evident in just having conversations with you. But is there maybe an influential mentor throughout your career that has really benefited and impacted your life, particularly your professional journey along the way? And if so, what were some of those key lessons along the way?

Phil 7:42

I think a lot of the, the mentoring that I got was a little unusual. It was not as much face to face. It was more people that I studied and read. Um, maybe that's a, a, a lack of, uh, social skills on my part that I got a lot of my learning from, uh, from books and articles rather than, you know, one on one, uh, coaching from, from people. I got a lot of benefit from peer groups, uh, and, uh, and had a number of, of bosses that were really great in terms of pushing me to do my best. Uh, Alex Yemanijian's a guy I worked for for a while at, at, uh, at the firm in between Pete Marwick and the one that we started. Who was very helpful in terms of really pushing you to do the best you could do. I mean, he was one of those bosses that would, uh, that would make it clear if he wasn't satisfied with the effort that you put forward because he knew you could have done something a little bit better. Or if you drop some balls, he was pretty good about figuring out when you had dropped balls to get you to build better skills. But I felt like a lot of the, the learning I got or a lot of the, the interest in knowing more was from, from reading a lot, uh, and, you know, you and I talked about, I mean, people like Drucker and Warren Bennis and, and, uh, and, and John Wooden. Uh, which is strange for me to say as an SC guy, but you know, John Wooden at UCLA was, uh, is a guy that you can learn a lot from just from, from reading what he digested over a period of time. So I've, I've loved being able to, to piggyback on, on other, uh, thoughtful people who have really analyzed different areas.

Books and Leadership Philosophy

Matt 9:27

I love that. And speaking of books, Phil, you know, we briefly touched on it and you just mentioned Trucker there and John Wooden. But what would you say in really three books that you recommend for all leaders, regardless of where they are in their leadership journey? Are there three books that really come to mind that you recommend that have really benefited your life and that you recommend all leaders to really take the time to dig in and read those books?

Phil 9:50

Boy, I probably have a longer list than three, but I'll try to hit three that would come off the top. I mean, almost anything Drucker wrote, you know, effective executive or one of those compilations of some of his greatest hits, I think is a great place to spend time. I think Warren Bennis on becoming a leader is a really good one. Um, Charles Dewey on the power of habit. I found to be very practical because all of us have habits that could be improved or need to develop new habits. You know, there's so many things where you know what you should be doing or you know a better way to do it, but you just have to force yourself to build those habits. Um, so I, I guess it would be, those would be some of the first ones that would come to mind. Good to great, you know, and some of the other classics, of course. Um, but, uh, those are some of the ones that come to mind.

Matt 10:45

Those are all great. And I'll add in there, speaking of books on habits, Atomic Habits by James Clear is another great book on habits and really setting up routines.

Phil 10:54

Yeah,

Matt 10:56

and that really leads right into, I'm sure these books that you mentioned did have a great role in playing that. But how has your leadership philosophy, what would you define it as and how has that evolved throughout your career leading up to this moment?

Phil 11:11

I would say in terms of my philosophy, or at least my approach, it's probably a fairly collaborative, fairly debate oriented. Um, you know, somebody had that quote, maybe it was wooden that said, you know, get a bunch of smart people around that will argue with you. Um, that's kind of how our firm runs. We've got a bunch of bright engaged partners who are not shy about sharing their opinions. And, uh, I thought when our kids went through debate programs in school, I thought it was one of the best development things that they'd ever done. It made me really jealous that I had not done debate in, as a youth or in in school because it, it really gets you to think on your feet. It gets you comfortable with public speaking. You have to listen. Uh, to be a good debater because you got to be able to punch back and encounter, uh, what somebody else is saying and try to make your responses logical and back them up with, with facts or support. So, I think we operate as our firm with kind of a healthy dose of, of debate and I think that also, sends the message that there's not one person that's got the right answer all the time. You know, that it sometimes takes some back and forth to figure out what the pros and cons are and, and, uh, still you got to make a decision, but at least you've had a debate about the pros and cons. And we always say, I might weigh the pros and cons differently than you will. And we might make the decision based on how I weigh the pros and cons, but let's at least agree on what most of the pros and cons are. Because then if we go in a particular direction where we know there's some downsides, we can try to mitigate some of those downsides. Um, so I, I think that's, is, is kind of heavily influenced our leadership of the firm and the style that we have.

Firm Culture and Transparency

Matt 13:08

That's so great. there's a lot of executive and leaders across all sectors that listen to this podcast. how would you say that you guys have been effective in actually driving that culture of healthy debate and healthy conflict and even lower level employees having to really the courage and boldness to speak up and maybe challenge another senior partner? Is there anything that you guys have done as a firm, particularly with how you've led over the years to really promote that type of culture?

Phil 13:37

I think at our partner level, we've been clinging to a, an approach that most people say firms are size have moved away from. We're still pretty much of an open book where all the equity partners know exactly what all the equity partners make and have access to the same information. So at the partner level, we think that transparency or that. sunlight is, is going to be helpful in terms of encouraging people to speak up and encouraging people to, to, to have some facts behind their, their views. Whereas if we went to more of a closed system, I think you'd tighten the circle of the folks who are going to be debating issues. So we've tried to make it a little bit more, uh, egalitarian that way. And, uh, and I think the fact that very early on in the firm, mostly because of commuting hell in Los Angeles and Southern California, we've had smaller offices, a larger number of smaller offices. And I think that's given our firm a little bit smaller feel for a firm our size. And that's probably helped people in all the offices feel more comfortable. jumping in and participating and pushing back and saying, you know, why don't we do it this way? Our firm also tends to be a little bit more decentralized and less standardized. And so I think that encourages people because you're not trying to change a policy that's necessarily ironclad across the firm. Sometimes you're just trying to change a policy or how a particular office generates. So you're not pushing as big of a rock. It's kind of a subsidiarity, you know, the constitutional scholars would call it, you know, try to try to push decisions out to the most local level that you can, uh, because you'll keep people

Matt 15:30

why do you think so many leaders struggle with that, though? I mean, because every day I'm talking with leaders and executive leadership teams that they want to promote transparency. They say that, but then their actions actually contradict that. What have you guys seen, not only with only your firm, but also maybe with even clients or even just, you know, other industries? Why do you think so many leaders struggle with really the transparency behind? this is where we are, what we stand for. And also, like you said, the inner workings of even what people make from an income standpoint, why do you think so many leaders struggle with the transparency around that?

Phil 16:02

I guess if you were trying to make the best argument to close a system and not have as much transparency. Some of the arguments would be people are going to waste a lot of time worrying about stuff that they shouldn't worry about. Um, envy and jealousy is, is a common trait. You know, you might be happy with your comp until you find out somebody across the hall is making a hundred dollars or a thousand dollars more, or somebody that you think is not working as hard as making as much. So there can be some, some distractions and some, you know, energy oriented towards things that are maybe not as productive. So I think those are some of the arguments people would make in favor of a closed system and say that the people that have the most knowledge that are really making those decisions are better equipped to, to, to make the determination without a thousand people weighing in who don't have all the facts. Thanks. Um, and I also think you can probably run things more decisively, um, maybe move a little bit faster. If you have more of a top down approach, I think people could correctly criticize our firm as not being the most, uh, quick in terms of, of adopting new changes and, and things like that because we tend to encourage a lot of debate along the way. Uh, hopefully we're making better decisions if we're making some of them a little bit slower. But, you know, in this day and age with the. With the technology, the way it is has evolved, maybe speed is is a good justification for a little less transparency at times, uh, even though we've kind of leaned the other direction,

Matt 17:50

And so you mentioned decentralization. I think another challenge that a lot of leaders have, and, you know, I look at it from the standpoint of, I think a lot of companies were in the era of decentralization, but I also think that also so many benefits are. promoted there because of that. I also think the ability to maintain a positive and productive one culture, like one firm culture throughout the entire firm is really challenged in a way. How would you say that your firm's experience and even your leadership has been with that? and then also, has there been something that to really help streamline the alignment and really the togetherness of one firm?

Phil 18:29

I think, because our firm is is decentralized, both in terms of decision making and also in terms of geography. You know, I mentioned the multiple office locations. I think where we've ended up is one macro culture, but then a bunch of micro cultures. And so we hope and think for the most part that we've got the same broad brush culture across the firm in terms of the things that we all view as, as critical and most important. But then we tolerate a lot of deviation from that with microcultures within particular offices where because of the client mix or because of the geography, or frankly, even summer weather, people have different policies within those offices. And we're probably more comfortable than most firms in allowing for more diversity there and more deviation from the norms. So I think that's, that's kind of where we've come out at. When we started the firm, the first few lateral partners that joined us, other than the three of us that started were also colleagues from Pete Marwick days. And so we, we had a very common background and a long relationship with the laterals that we've brought into our firm. Some of our growth has been, has been driven by lateral hires from the big four and national firms. But with one or two rare exceptions, all the laterals that have joined our firm have had long term relationships with one or more of the partners before they joined the firm. And so I think that's helped us not fragment the culture further because if you bring in a lot of laterals without any common backgrounds, you're naturally going to bring in, you know, especially if they're experienced people that are well established in their careers. They're going to bring some culture with them. They're going to bring some, some habits and some approaches that they felt were what helped their former firm or them succeed. And so you get that, that clash of ideas. But, uh, in our case, most of the laterals that have joined the firm have had real close personal ties with, uh, with one or more of our partners.

Matt 20:44

And HCVT is really known for its deep technical skills. When did you guys decide that that was really going to be a differentiator for you? And then how have you guys been able to really instill that throughout the firm over the years?

Phil 21:02

I think almost from day one, we wanted to distinguish ourselves on, on the technical skills. I think there were parts of the big four or back in those days, big eight that we were very reluctant to move away from. You know, we love the fact that the big four, big eight had this tremendous depth of expertise. Um, several of our partners, including myself had the chance to work in their national tax offices where you really got a feel for the, for the depth of resources around those firms. We also felt like that was going to help us justify higher prices, uh, higher rates than, uh, some of the local firms. Uh, we liked the idea of, of competing against big four and other national firms more than we liked competing against smaller firms where we thought it might be more based on cost. So I think early on, we like this idea of of Technical expertise to distinguish us from some of the smaller firms and be able to justify much higher rates. And, uh, we have tended to keep our rates pretty high compared to most of the firms our size. And that's been a great filter in terms of clients that if they see the value. they're willing to pay for it. If they don't see the value, then for sure they're going to go hire somebody else. You know, it's kind of like progressive insurance, you know, recommending that you go to some other insurance company if, uh, if, if their underwriting says that you're risky.

Matt 22:36

And how have you guys been able to really implement that though and cascade the sole purpose of deep technical skills? Because I feel like a lot of organizations want to be able to provide that immense level of value to all of their clients and customers and key stakeholders. But I feel like saying it or declaring it from a leadership perspective is totally different than taking ownership of it. And really cascading it. How have you guys successfully been able to cascade that throughout the firm, though, Phil? Because I think it's pretty remarkable what you guys have been able to do as it relates to that.

Phil 23:10

I guess I can think of several things we've done that have been helpful on that front. Um, we've been very careful about the lateral People we bring in the experience people bring in, we basically are interested in hiring people that already fit that mode, you know, that have established real technical expertise and are looking for a shop where technical expertise is valued. So there's a, there's a good filter there where if you're. If it's clear that this is what your firm's about, and the type of work you're trying to do, and the way you're trying to do the work, uh, then you tend to attract people that are very similar to that. Whereas if your firm had a more diffuse reputation, then, you know, it would be harder to, to stay in that, that technical lane. Um, I think we've been big on training from day one. You know, when we were a smaller firm, there was a limit to On how much of the training we could do in house because we just didn't have critical mass for all the different courses you'd want to do. So we, from day one, we're pretty open with the checkbook on paying for external training. We've always paid for, uh, masters and tax programs and things like that for our, for our folks. Whereas some firms, you know, are, are maybe going to subsidize that or expect you to do it on your own. We've got a woman who runs our training program, who's just phenomenal, and she's built over time a real combination of external and internal courses. So we send a lot of our people to external classes that sound pricey, but it's one of the ways that you stay current and really stay in touch with what other leading practitioners are doing and thinking. We have. partners that are teaching in those programs. We have partners writing articles for the tax journals uh, and the BNA publications. And so we, we try to message the fact and, and try to walk the talk that, that sharpening those technical saws is something that we view as being very valued at the firm and how we, uh, deliver value to the clients.

Matt 25:18

The importance of training is just, it's paramount. And I feel like, I always make the joke in that, hey, professional athletes, before they play a game, one day a week or two days a week, whatever it is, leading up to that moment, it's rigorous practice and preparation. a Navy SEAL commander, same thing, right? So I feel like in all these industries, especially where high performance is really demanded, training is always this, the centerpiece of that. But sometimes we in business, we forget the importance of that. So it's no surprise that HCVT has continually been able to expand on that, uh, really because the prioritization of training.

Phil 25:53

Yeah, I heard a couple of your prior episodes with some of the Navy SEAL guys. And yeah, that's just a perfect example of, you know, those guys train like crazy. So that when they are on a mission, It's almost a reflex at that point. I mean, they don't have to, to, to bog down and try to figure out what to do, just like a football team or somebody else that is out there executing on plays that by the time you get to game day, it's, it's hardwired at that point. Um, so I don't know if our training is, is that good, you know, as good as a, uh, you know, as a, as a well oiled football machine or a Navy SEAL, but that's certainly what you're, what you're trying to get closer to.

Matt 26:33

Absolutely. Phil, is there a pivotal moment throughout your career? personally or professionally that has significantly shaped just your perception of really Why you originally started HCVT, but also how you've continually led throughout the course of your life Is there one pivotal moment that really comes to mind?

Phil 26:53

I, I don't think so. I mean, I think for me, it was more of a, of a evolution. I, I guess the, the starting the, our firm itself was, was the pivotal moment in retrospect. I'm not sure at the time we realized it was it was more something. Let's, let's give this a shot and see how it works. Um, but I don't think there's been necessarily one just, uh, just light bulb moment for me. It was much more of a gradual process over a period of time. Uh, I think when I, uh, had a chance to go to some external training programs, uh, including one through our YPO group at, uh, at HBS, those, those weeks when I went to an executive ed program and got out of the day to day are probably when I did the most clear thinking about what our firm was trying to do and, and what, you know, constraints we were running up into and, and what things we might want to do differently. So I think, uh, Having a short sabbatical periodically is something I would recommend because it's very tough to, to think clearly about things when you're, you're in the day to day, uh, chaos.

Matt 28:08

Phil are there any ethical dilemmas That you've encountered throughout your profession and really your entire career and how have you navigated those if any?

Phil 28:18

I think in the, in the accounting area, and, you know, I'm, I'm a a, a tax person by trade. The ethical issues are there every day. I mean every hour. Um, you've got clients that would love to hear you tell them an answer that's better than what the rules would allow. They've got buddies who have convinced them that the answer is better than the rules would allow, and there's a wide range. of approaches among CPAs and other tax professionals in terms of, you know, how aggressive or conservative or creative, you know, there's a lot of different, you know, words people use to describe it practical. Um, so I think if it's a, it's a field day for ethics, if you're in the tax area and, uh, clients would love you to love you to absorb all their. their moral dilemmas and all their issues with their conscience. You know, if their CPA says you can take this deduction, then they're fine. They're off to the races and they're not losing any sleep over that at all because, hey, my CPA said this was okay. So, um, I think that's, that's a big deal. Um, I mean, the other time I can really remember A tricky ethical issue is one of our, one of the partners that joined our firm had been with another firm that, um, that that he went to for awhile before he joined HCVT. And he called me up from this other firm and was just dumbfounded that he had gone out to, to represent a client on an IRS audit. And came back to the office. He was pretty new to the firm and said, you know, I just, you know, got asked a lot of detailed questions by this agent. I need to see the documentation for all this stuff because we're going to have to submit this to the, to the agent. And to make a long story shorter, basically found out that his new firm had fabricated all the documentation for this audit. He was livid. Because he's thinking he's been out there defending what turned out to be fraudulent deductions. He wanted to go straight to the IRS to nail his boss that had put him in this position. Totally understandable reaction, you know, but we said, Wait a second. You may have some loyalties, some professional duties to your clients. If you go to the IRS and tell the IRS that your boss has been cooking the books, you could be throwing your client out. Under the bus, which you're not allowed to do from a professional ethics standpoint, even though it would be the right moral thing to do. And so we got on the phone with the individual who's currently the, the dean of the accounting school at, uh, at USC, who happened to sit on the state, uh, Ethics commission for for California CPAs, and he confirmed that he could have been in a big mess if he would've gone to the IRS and told them, um, because he would've been disclosing client confidential information. So instead he quit and brought an action against his former employer that he prevailed on. So he, he still acted, you know, morally and ethically, but his original instinct would have been a great moral move, but could have been a, a professional ethics glitch.

Personal Habits and Work-Life Balance

Matt 31:55

Wow. Speaking of high performance and you mentioned Navy SEALs and some of the other things that we were mentioning there on training, are there any personal habits or routines that you really attribute to your professional success and leadership impact over the years, Phil?

Phil 32:15

As I mentioned before, I think the best thing that, that I've done is just try to be a sponge for other people's thinking and. reading, you know, now it's more maybe podcasts even than, uh, than written content. Although I still, I still do a lot of both. So mostly it's, it's trying to keep your eyes up for what you don't know and how do you stay current? Uh, what are other best practices? Uh, trying to be fairly self aware about what your own limitations are. I mean, there's some things I don't do as well as other people. Um, for somebody in my, uh, profession. I'm not the most organized person in the world. Uh, I operate well in chaos, but I'm not the most organized person. So I've always tag team with people who are incredibly organized, um, to shore up that side of things. So I think it's, it's Trying to stay, you know, alert, trying to stay interested, trying to stay curious. Um, you know, we like to joke at our firm, we get smarter every year. Uh, we, we said that the first time after we screwed something up and just didn't want to do it twice, but, uh, but it became kind of a mantra at our place that we get smarter every year, uh, and sometimes say, and need to.

Matt 33:32

Well, you know, what's funny about that, Phil, is that I really believe that it's not just a mantra because when I recently spoke at your guys partner. partner wide summit, you were in the first row taking notes for the whole 90 minutes that I was speaking and sitting through a 90 minute speech alone is not the easiest task with today's, the attention span and so forth, but you were in the front row taking notes. And I always say, you don't know that I use that as an example now, but I do use it as an example, because I really think that that mantra of every year we get smarter is because of the tone that you and the other founding partners have set forth.

Phil 34:10

I think you go into most programs like that and thinking that if you can come away with. two or three ideas that you can put to work, that's a great use of your time. You know, then that, that's a great speaker. If you've got a couple of things that you can try to use to improve your game, um, early on, sometimes I would come up with too long of a list. And if you got too long of a list, you probably don't implement any of it. But you know, if you've got a shorter list, you know, it's,

Matt 34:37

That's true.

Phil 34:38

it's more likely to get executed on.

Matt 34:40

That's true. Phil, is there anything that you've done throughout the years? Because I see it, another challenge that I see every day with CEOs and executive leaders is really the ability to kind of recharge, whether that's taking time off every now and then. You mentioned a brief sabbatical. Every leader has a different best practice that has worked and benefited their life. But is there anything for you or any advice that you have for other leaders out there that, how can you, continually develop that passion for the work? Is there anything that you do that kind of outside of work that helps you navigate that, that passion and that momentum?

Phil 35:18

Yeah, I think the things that that I do that have been helpful over time is, you know, some is physical activity. I mean, I think the best blank spot I have every week is when I'm still playing hockey because I'm not thinking of anything else when I'm on the ice other than, you know, where's the puck and is somebody gonna hit you or not? Um, so I think having, you know, and some people do that with workouts or swimming or running or, or other sports endeavors. Um, but I think something like that is very healthy physically and more importantly mentally, because I love having a break from thinking about, you know, the work stuff. As I, as I mentioned to you, I got a lot of value out of an exec ed program where we spent a week at HBS every year for, for 10 or 12 years with a group of other CEOs, uh, doing case studies and things that that was a, uh, a tremendous amount of work, but it was incredibly Recharging because it was different and it, and it got me thinking about things from a, from a different perspective. And then I would have probably been one of those people that, that poo pooed the idea of vacations. Fortunately, my wife was a lot smarter than that. Um, and from the time our kids were really young, planned crazy trips once a year, whether it was to, you know, Brazil or Japan or Australia or. Italy, my favorite spot. And I think, you know, taking, you know, one to three weeks and just going someplace else, uh, is an incredible recharge because just the, the physical act of, of leaving your house and flying away, I think clicks off some buttons for me and, uh, and the longer I'm gone, you know, the less I'm worried about the traffic, uh, while I'm gone. Uh, if I'm only gone for a couple of days, I'm probably still in work mode the whole time, but if I take off for three weeks on like day two, I'm ready to shut it down for a while.

Client Relationships and Future Vision

Matt 37:18

We mentioned having difficult conversations and really the culture that you guys have instilled within HCVT as far as healthy debate and having those difficult conversations and always challenging the status quo. But how have you been able to handle difficult conversations with clients? Over the years. And what is, how is something that you guys approach that even still to this day?

Phil 37:41

Yeah, I mean, I don't, I don't know if there's anyone that enjoys difficult conversations, you know, some people run to them much more easily than others. And it's, it's understandable that people. Don't like to do it because you know, the whole label is, you know, difficult conversations. So I think with clients what's been helpful for us Is that for for the most part and for for most parts of our firm? We've got almost more clients than we can handle and almost more referrals than we can handle So we've had the luxury of being able to tell clients You know, for example, ones that, you know, think our fees are too high, instead of just ending it in a negotiation with them over, you know, why, you know, they should pay more than they want and less than we want. It's easier to just say, we can help you find some less expensive practitioners. You know, this is not going to be a satisfying relationship if, you know, you think every bill is too high and we see that you're, you know, Not interested in paying what our standard rates are. Let's just go find a firm that can do a good job at a lower rate. And so I think we've had the luxury on the on the economic side of those conversations on the. Ethical side, which is the other time that we have some, some difficult conversations with clients. I think it again, just comes down to a fit. Um, we've probably gotten better over the last 10 or 15 years of just pre trying to preempt that by when we go propose on a client, say, look if you're looking for the most, aggressive people to push the envelope, you're probably not going to be happy with us. So you should talk to other firms who might be more willing to, you know, push the envelope or, you know, get close to having chalk on their feet. And we may just frustrate you if that's where you're oriented. If you're fine working with people who are going to try to be as Proactive on the planning side and as creative as possible, but are going to try to stay within the fairway. Then, yeah, let's let's talk. So, because we've had situations where clients have pushed us to do things that we weren't comfortable with, even just the way a client takes a no. When you say, no, we can't do this or that transaction won't work or something like that. Most clients will accept it and assume that we know what we're talking about, but some clients will just be relentless in pushing back and, you know, trying to fight for an answer that we don't feel comfortable with. And once we pick up that sense, we, I hope most of the time we're the next conversation with that client is, you know, let's find you guys a better, a better fit. Okay.

Matt 40:32

That's amazing. Always staying focused on the mission. I love it. is there any advice that you have practical advice from an accounting perspective for all executives, CEOs, leaders that are looking to continually grow their organization? Is there any advice or things that you always have for whether clients, but also just things that you've shared and seen throughout the course of your journey? As far as growing the business that you see a lot of leaders in all industries, where they might make this mistake from a money perspective, accounting perspective. Is there anything that comes to mind as far as advice goes for leaders?

Phil 41:08

I guess the couple things that come to mind are, I think you've got to stay focused on what value you're actually delivering to the clients or to your customers. Um, you know, the more you can look at it from the standpoint of if I were in their shoes, would I pay for this? Would I pay happily for it? Or would I pay grudgingly forward for it? What are they paying for? Why is a client coming to us? Why is a client coming to any other professional service firm? Is it because they trust you? Is it because you've got expertise? Is it because you're absorbing hassles and burdens? Is it because you're helping them manage risks? You know, where is the value? Because I think if you can focus on that, then you gradually do more and more of that type of work. And less and less of the work that clients don't put a lot of value on, or at least you price your services for that mix of work based on, on what the components are. So I think one of the things is just looking at where are you delivering value versus just what does it cost or how much work does it take? I mean, a lot of the things we do take a lot of work and the clients don't see much value in it. Um, You know, most of our clients don't know if the tax returns are really accurate or not. I mean, they just don't. I mean, it's, it's, it's hard to figure that out from the outside. So, um, so I think that's, that's where I would, would spend some time.

Matt 42:42

That's great advice. Phil, my last and final question for you is you've built the this incredible firm. It started in 1991 and it's grown into one of the top 30 largest firms in the United States. do you see and what do you see for the future of HCVT?

Phil 43:03

I think unlike some firms, we're not trying to be the biggest or grow the fastest. I mean, we're, we're very happy that we've grown like we have. And like I said, some of that has been turbocharged by, uh, some really great Lateral hires from other firms, and that's that's helped us grow. Um, but I think we will, at least for the foreseeable future, try to stay more as a high end boutique rather than, uh, just trying to get bigger to get bigger. Um, and so I think that's where the focus is, is how do you maintain the quality? How do you gradually, uh, elevate the quality of your clients and the quality of the work that you're doing? Um, and if you can continue delivering high quality, and I think we have a very user friendly approach for our clients. I mean, I think clients find our firm easier to deal with than the, than the big four generally. So if we can be easy to, to work with, and then also deliver high quality. I think there's going to be a spot in the marketplace for us. I mean, we're a decent sized firm, but in the total scheme of things, I mean, we're, we're tiny compared to the profession or Or really small compared to these national firms and the ones that are, you know, pushing up billion dollar plus revenue. So we don't have to take a lot of the market, you know, we can take a pretty small slice of the market and hopefully it's relationship driven where it's clients that are going to be with us for decades rather than, Uh, a lot of churn in the client mix because I think then we get a better answer, the clients get a better answer. Our employees are are feeling more satisfied because it's a lot of long term relationships. And, uh, and I think that's that's probably where we'll continue to focus.

Conclusion and Final Thoughts

Matt 45:01

That's so great. Well, Phil, I really do appreciate you making the time. It's been such an honor and privilege to have you on today. and most importantly, it was unbelievable experience getting to join you and the rest of the partners and managers at the recent summit. And I really do appreciate you taking time out of your busy schedule here to talk about HCVT. leadership and your leadership journey, but also HCVT and the great firm that you've built and founded back in 1991. Thank you so much for your time, Phil.

Phil 45:27

Yeah, you're very welcome. And we had a great time having you at our partner manager summit and look forward to continuing to be in touch.