The field of professional accounting has shifted its focus considerably during the 1990’s. Large companies like American Express in the United States have begun offering accounting services. Software companies are now producing accounting software packages that make it easier for individuals and businesses to perform their own bookkeeping and preliminary accounting services. Tax software is readily available thus enabling individuals to complete their own tax returns without seeking professional help. This shift in knowledge and expectation of the general public has in turn lowered the demand for traditional, compliance-orientated accounting services such as bookkeeping, preparation of simple financial statements, and filing tax returns according to government specification. Clients increasingly demand the benefits of an accountant who functions in an advisory or consulting capacity and fosters a relationship based on reliance.
In my role as a coach, I have noticed that a difference exists between the role of a traditional, compliance-oriented accountant and the role of an accountant who also provides advisory services to their clients. I will explore why accountants have traditionally been reactive and the benefits of shifting to a more pro-active model of providing additional value-added accounting services. I should begin by defining both modes of service.
A compliance-oriented accountant traditionally collects, processes and analyzes historical financial data of a company or individual.
An accountant who also provides advisory services for their clients extracts relevant information from the data provided and utilizes the knowledge and information along with his or her understanding of the given client’s goals in order to implement strategies which are of a long-term benefit for the client.
It is important to remember that accountants who supply advisory services also continue to attend to compliance issues. However, the true value of their expertise can only be evidenced once the compliance work is complete. Accountants who provide advisory services utilize the knowledge they have obtained regarding a client’s personal, financial, or business situation and use this information to look forward and create future opportunities. Whether they’re conducting cash flow analysis, implementing budget-forecasting systems, or attending to personal estate and retirement planning issues, this new breed of accountants use their wisdom and expertise to help their clients avoid future problems.
Why is it then with consumers demanding more than mere compliance services that so few accountants offer the wide range of value-added advisory services? Perhaps it is because accountants have traditionally performed well when conducting compliance work and therefore have not had to perform advisory services function in the past. They have been able to avoid innovation by treading the same, reliable route to “success” over and over again. Most accountants have the knowledge and skill to become more pro-active and client-oriented, yet they fall short of tapping into the extra benefits and enjoyment that is earned by the supply of value-added services.
It is time for a change. Both accountants and their clients would benefit greatly from a greater utilization of the advisory services approach to the accounting profession. As this shift becomes more prominent, compliance accountants may lose their ability to remain competitive and retain customers. Clients are increasingly willing to pay higher fees in order to receive the service they are looking for. Would you stay with your accountant if she only provided one-third or half the services and knowledge of her competitors?
The first step in making the shift from traditional compliance-oriented services to becoming an advisor, is to invest additional time into gaining a better understanding of your clients’ long-term needs. Simply stated, ask a lot of questions.
The second step towards being an advisor is to listen carefully to your clients’ needs to be sure that you fully understand them and are on the same track. Following are some suggested questions that you may wish to ask your clients in your new role as an advisor:
“What current opportunities are you presented with that you haven’t been able to capitalize on?”
“What problems in your business are holding you back?”
“Why is this particular issue concerning you?
“How do you see yourself successfully dealing with this problem/opportunity?”
“When would you like to have this issue dealt with?”
“What budget do you have for this project, to ensure that you capitalize on this opportunity/solve this problem?”
Following is a success story supplied by Eduard Janzen, CGA. Ed is a public practitioner who practices in Richmond, BC. Ed’s belief in his practice is that ssensitivity to the unique needs of each client is the primary source of his extensive referrals and growth. He recognizes the importance and needs of the small to medium sized enterprise and this remains the emphasis of his client relationships. Consultation and tax planning have also become a focus within his practice, together with the provision of other traditional accounting services.
“When I first began in public practice 10 years ago, we used the motto, “We listen to your needs” in our advertising and as a philosophy of our firm. Our client meetings would generally be 2-1/2 to 3 hours in length to allow us to not only obtain an abstract of all the information that would be required for the preparation of that year’s financial statements, but also to obtain a clear understanding of the direction that client was wanting to go and to obtain a solid profile of the client and his/her business. We view the preparation of the financial statements and tax returns as a starting point. Clients have for too long viewed accountants as “necessary evils” in providing the required financial statements and tax returns for banks, tax authorities and investors. The financial statements and knowledge obtained in our meetings and discussions with the client and the financial statements preparation are an excellent springboard to other advisory services.
Word got around. Despite the fact that our fees are higher than our competition, our growth provided our firm with a doubling of fees in the first year, a doubling of fees in the second year, an increase of approximately 75% in the third year and continued growth today. Referrals have been a substantial part of our practice growth. The client is receiving the service and value that they are looking for. Clients receive direction and on occasion affirmation of a new direction that they may have been contemplating but were not yet willing to take the first step. As well, clients refer based on their experience with a professional and our experience is that new clients that have been referred to us fit in very well with our areas of desired practice. Building our client base from scratch has created an excellent fit of both client and accountant and a truly enjoyable work environment.”
In the end, the provision of advisory services within your accounting practice is about developing an understanding of your client’s long-term needs. So, ask questions, listen, look for ways of adding value, and uncover opportunities for innovation and growth. When you do, a win-win situation is created: The client receives better, more extensive service, you will reap the financial benefits whilst performing more interesting and challenging work. Referrals are never too far behind. Additional business opportunities are waiting for you. Seize them, by starting to assume an advisory role in your relationships with your clients. Only your competition will thank you if you don’t.
From Compliance to Reliance For Accountants - To learn more about this author, visit Kevin Lawrence's Website.
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