Accountants can diversify the services they offer in the same way bankers, stockbrokers and insurance agents did to increase their revenue streams.
By drilling deeper into the segment of the business you most like, accountants can do more for their clients than simply filing taxes for businesses and individuals, says Bryce Sanders, president of US consulting firm Perceptive Business Solutions. “Accountants can expand their businesses into services the client is going to buy anyway.”
Established accountants with a large base of individual clients often have the advantage of client loyalty. However, everyone wants a good deal, so some pricing pressure develops. “Unless you can bring in new clients who will pay the price you charge for traditional services, you need to diversify your revenue stream,” Sanders says.
He offers four strategies to explore to diversifying revenue:
Financial planning: The more assets the client has, the more potential problems they face. Your high-net-worth client keeps cash liquid (often at a bank), buys securities (held at a brokerage firm), protects their family with insurance, and borrows money, long- and short-term.
Everyone providing these services makes money from the products they sell. They make money promoting “one-stop shopping,” although no one can be the best at everything.
You are a fiduciary offering objective advice. People will pay hourly fees to learn the best way to buy these services.
If you can’t beat ’em, join ’em: Some accountants choose to provide one or more of the above services through their firm. Others enter into an arrangement with a product provider that provides referral fees or commissions. It’s legal, but it must be disclosed to the client.
The challenge is the erosion of the fiduciary relationship. If the accountant sends the client to a specific financial advisor or insurance agent, are they getting pricing that’s in the client’s best interests? On the positive side, many accountants may prefer dealing with a known quantity.
Specialisation: You study, study, and then study some more. You gain more letters after your name. Use the qualifications to add more services to your offering.
Niche building: Different from just specialising, most professions have characteristics unique to their field. Physicians have different tax issues than jewelers. Teachers are different from real estate developers. Expatriates are another category entirely.
If you build a practice within a specific business segment, you gain a reputation as a specialist in the field. People love their family doctor, but don’t want them attempting brain surgery.