How accountants can move from compliance services into advisory
If you’re an accountant, you’ll already know the story: While compliance has been the bread and butter of the industry for years, the displacement of traditional compliance-related services by technology is increasing while the market remains as competitive as ever.
For accountants, advisory services offer a way to maintain revenue, bring in new customers, increase customer loyalty and to prevent your business model becoming a race-to-the-bottom price war.
So what changes do compliance-focused accountants have to make as they transition into advisory?
In this series we take a look at the strategies - as well as the tech, the marketing, and the up-skilling - required to successfully transition from a compliance-based accountancy firm to an advisory-focused one.
Accountants typically provide customers with three distinct but overlapping areas of expertise: Accounting/record keeping, tax advice, auditing. Now advisory is being added to that list.
The rationale is simple – provide customers with the tools and knowledge to do their jobs better and they will reward you with loyalty, increased spend and a sustainable, referral-based business.
Now advisory is a broad term. It can cover any of the following, or any combination of the following:
❏ Debtor management
❏ Cashflow analysis
❏ Wealth management
❏ Forensic accounting
❏ Sustainability advice
❏ Risk management
❏ Financial literacy advice
❏ Financial technology training
But what you can offer and what you should offer are two different things right? So how to decide? Paul Greenwell, blogger and platform strategy manager for MYOB suggests proving your value proposition with a handful of clients before broadcasting your intentions to the world. And the most obvious way to do that says Greenwell, is simply to ask your clients:
❏ What parts of your business do you feel you need help with?
❏ Would you be interested in finding ways to improve your cash flow easily?
❏ Would you be interested in a review of your business assets and prospective purchases?
❏ Do you want to know more about SMSFs?
❏ Have you thought about succession planning?
❏ How would you feel about regular check-ins regarding your business finances?
So it’s as simple as adding those elements to your services roster and roaring ahead, right? Probably not. And the issue may be you.
Bstar’s Accountants Research Report 2016 says that 81% of accountants lack confidence in their ability to deliver advisory services.
“Most accounting practices don’t know enough about themselves, and their practice,” the report says.
“They don’t have a clear understanding of what they can offer, who their target client is, and how much to charge. Before accountants are ready for advice services, they need to do their homework.”
Margaret Holmes, CEO and director at Engine Room puts it in stronger terms.
“The fact is, not everyone is qualified to do advisory work,” she says. “Some accountants aren’t even qualified to do accounting!”
The issue, she says, is experience.
“So you’ve run an accounting practice, but what do you really know about running a business? What do you know about all the sales, marketing, HR and all that stuff? What about launching a product or promotion, or any of that top line stuff that they’ve never had to do? That’s the real challenge.”
Luckily, with diligence, accountants can develop ‘real world’ skills while still keeping their day jobs.
“The secret is to get exposed to the ideas that can form the basis of your advisory,” says Hamish Mexted, Wellington-based accountant with iif. “Go to every meetup you can go to, every entrepreneurial meeting, get out of the office.”
“Advisory isn’t about being able to do a capital analysis. Advisory is knowing how to deal with people and knowing what’s going on with them, so you just need to be able to talk to people and get comfortable having those conversations.”
“That’s really what they’re really paying us for.”
Look out for part two tomorrow!
Article by Jonathan Cotton, content marketing manager at Debtor Daddy