There are two basic models to develop and grow your accountancy firm. Get more referrals or increase the fees clients pay for your advice.
Accounting firms are in a unique position to be regarded as the kings of advisory services to their clients. The profession is highly regarded by the public and you are often the first person your client phones for advice. Avoid selling yourself as a bookkeeper. Let clients think of you as their own advisory resource. You just need to determine how you will charge for that advice.
According to Bryce Sanders President of Perceptive Business Solutions Inc clients initially engage their accountant to do:
- Tax preparation – You file their taxes with the aim of minimising their tax bill. As the saying goes, “it’s not what you make, it’s what you keep”.
Representation – You represent them before SARS, explaining how their tax return was prepared. This has huge value.
- Prepare financial statements – Bank provide funding base don financial results.
You should use this unique position to move into other areas where you can provide advice:
- Rent, lease or buy – the HBO series “Ballers” focused on US football players and financial advice: “If it drives, flies or floats, rent it.” Seriously, you can advise clients on the advantages and disadvantages of owning or leasing cars
Executive compensation packages – no, you haven’t become a headhunter who negotiates their client’s employment contact. You can advise a client who might be taking their first long term overseas assignment of the tax consequences and the benefits they should negotiate with their employer
Estate planning – your client may have earned their fortune, but the government is a silent partner when they die. There are strategies requiring advance planning that can reduce their eventual liability. You can help or refer them to experts
Starting a business – your client may take early retirement and choose to follow their dream. They are now self-employed. They need lots of advice. If the business succeeds they may choose to sell. That business will need a proper valuation
Surviving spouses – many older clients lived lives in defined roles. One partner made the money, the other ran the household. The aging breadwinner is concerned how their surviving spouse will cope if they die first. You can provide advice on structuring accounts so bills get paid and their anxiety is reduced
Lending alternatives – banks are in the business of lending money, but what are the best alternatives for your client if they are building a house or starting that business? Are they carrying balances on their credit cards that could be paid down with cash in savings? Could they shop around for a lower credit card rate?
Charitable giving – it may be in your client’s interest to reduce the size of their taxable estate by making charitable gifts during their lifetime. These might be structured to provide income in the present
Protect the idiot – okay, this can’t be sold as a service, but you can protect clients from themselves. A chance remark overheard in a bar about an upcoming earnings announcement might seem like a golden opportunity to buy some stock options.
Planning for retirement – the average life expectancy in the UK is 81.2 years. Wealthier people often live even longer because of better exercise, diet and healthcare. Will your client outlive their assets? How early should they start planning for retirement? Younger clients may need some convincing
When heirs are irresponsible – “if you don’t travel first class, your heirs will.” It’s been said the first generation makes the money, the second struggles to keep it and the third generation loses it. Suppose the next generation is set to live the easy life when the client is gone? The client may want to keep the principal at arm’s length. You can help them get that advice
Liquidity events – emergencies happen. It may be a new roof or sudden medical expenses. How will the client raise money quickly if necessary? You can help them plan in advance for this contingency
Several of these scenarios involve other specialties. Bankers, insurance agents and investment advisers will probably enter the picture. Each has an interest in selling their product and making money. Setting up an advisory form will require that you identify specialists in their field and getting them on your team. This could be a network relationship under your accounting firm’s brand. This service is offered to the client and you get paid for the advice.
As Bruce concludes “You are a fiduciary. You work for the client and are paid for your advice. You can be the team captain in a relationship to serve the client. You bring lots of value to the table”.