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those paid by younger clients, especially those between
the ages of 55 and 70. We might also agree that this
correlation should be taken into account in valuing the
subject list. However, we are not sure what this
correlation has to do with the useful life of the list.
As suggested by Dr. Alexander, a client who retires still
has a need for an accountant; it is just not as great a
need. In fact, the chart of average fee versus age
distribution in Dr. Alexander's report shows that fees
were paid by clients in the three oldest age groups, 70
to 75 years, 75 to 80 years, and 80 to 85 years.
Client Turnover: Dr. Alexander states that "Despite
an accountant's best efforts to maintain client relation-
ships, and often due to factors completely outside the
accountant-client relationship, a certain number of
clients can be expected to drift away to other firms".
Dr. Alexander considered the effect of this client turnover
on the useful life of the client list. He based his
analysis on the opinion of Mr. Albert S. Williams in his
manual, "On Your Own! How to Start Your Own CPA Firm".
According to Dr. Alexander, Mr. Williams "writes,
'Typically, the number of terminating clients ranges
between 5 to 10 percent of a given practice' (p. 35)."
Dr. Alexander chose 5 percent as a client turnover rate.
Dr. Alexander did not explain why the use of this annual
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