What does it mean to provide advisory services?

Apr 20, 2021 | Business Strategy, Client service, Lead generation, Strategy

We have all heard the projections that compliance work is dying and that accountants must move into advisory services.  This is not a new phenomenon. It started long before the pandemic. I first debunked the hype in 2009 so it really isn’t new.

What has changed though is the speed with which the perceived value of compliance work is falling. This may not matter as regards your current clients but it is becoming more relevant when it comes to winning new clients – especially those where you might hope to provide more than ‘just’ compliance services.

The related questions though include: What does it mean to offer advisory services? How different is this from what we’ve done before? How to promote advisory services to current clients and how to promote them to prospective new clients?

When I work with my mentoring clients we generally find that there are no ‘one size fits all’, solutions that work across the board. The best and easiest to action answers are specific to each accountant’s own backstory – experiences, clients, style, approach and fee levels.

For the moment let’s just consider the 5 types of non-compliance service that could be branded as ‘advisory work’. You cannot expect to immediately jump to the 5th level – and you may never want to go there.

My advice though is to start making the transition away from promoting and providing only compliance based services to new clients. Over the next 5-10 years much of that work will be further devalued as it becomes more and more automated. The sooner you focus on doing more than this for (new) clients, the more sustainable will be your client base and your practice.

Here then are those 5 non-compliance services you might be offering clients:
1 Impromptu advice
This style of advice typically happens when someone other than YOU creates a need for your client to obtain your help, support and advice. Typically this would be when HMRC opens an enquiry or starts a tax investigation.
Impromptu advice includes that which you provide in relation to one-off or unusual transactions – such as when clients plan or make major purchases or sales of land, buildings, a business or shareholdings.
And it also includes the occasional business advice you provide either because your client asks for your view, or because you spot a need to provide some guidance.
By definition, impromptu advice is not part of your regular service. If it is then you’re probably giving it away which isn’t ideal is it?
2 Specialist advice
This is where you have particular expertise so that you can advise, when required, on specialist topics. For example, Capital Gains, Probate, Inheritance tax, Insolvency, Risk management or specific tax reliefs.
An increasingly popular specialist advisory topic relates to helping clients adapt to use cloud accounting software.   Some accountants choose to do this with only their preferred package.  Others will help clients move from manual or spreadsheet records to a choice of platforms.  Making the right choice for the client is part of the service.
You may actively promote your ability to provide specialist advice and charge for it separately to your recurring services.
3 Profit and financial analysis
You may already help clients here to some extent as part of your core recurring compliance services.  Some accountants do this. Though not all charge a commercial rate for this element of their service.
Some accountants who regularly provide this advice to clients are surprised to learn this isn’t a standard approach. And some give such advice away for free as part of their annual service offering.
As clients embrace real time bookkeeping in the cloud so it becomes possible to provide more timely insights and advice to clients about their profits and financial position.
Profit analysis can be quite a basic service that unqualified staff  perform. And, indeed, this is one reason why, within a few years, it will be available as standard via accounting software. In the meantime there are various computing solutions that accountants can use to provide this as a valuable cost effective service to a wider range of clients than ever before.
Please don’t waste time crafting your own spreadsheet approach to profit analysis for clients. It won’t be as flexible as the commercial solutions, it won’t look as good, it won’t be as reliable and robust, and it won’t be as quick for you to input data and to use as a commercial solution. Also, most of these can draw information directly from clients’ cloud bookkeeping systems.
4 Profit improvement
Profit improvement advice goes further than simple profit and financial analysis as it requires forecasting and wider commercial and financial understanding.
Accountants may provide this service through their practice or by operating as a Virtual Finance Director.  Clearly it involves more than simple ‘profit and financial analysis’.
And again, some accountants undervalue this service such that they give it away for free. On the other hand, an increasing number of accountants are using technology to assist them here. As a result they can provide a more valuable service which takes less time than ever before. And which enables them to increase their fees from suitable clients.
5 Strategic Business Advice
Let me be clear. I am not referring here to the type of reactive ‘business advice’ you provide when clients seek your input every now and then.  That’s impromptu advice, even if your website claims you are an ‘accountant and business adviser’.
I suggest that Strategic Business Advice (SBA)  should be something that accountants provide to appropriate clients on an ongoing basis. And that clients pay for this as a service quite distinct from recurring compliance work.
SBA involves looking to the future and applying your knowledge, skills and experience to provide personalised, relevant and compelling support, encouragement and advice to clients who have learned this is worth paying for.  It typically involves the provision of insight, oversight and foresight.
Typically you’ll do this monthly or more often for those clients who understand and appreciate that the value of your strategic advice exceeds the cost.
The regular provision of strategic business advice is akin to being a business mentor, coach or consultant. That’s what I do when I’m working 1-2-1 with accountants.  By being on the receiving end of such a service and valuing it themselves they are also learning some of the skills they will need to employ themselves.
I appreciate that plenty of accountants want to avoid moving into this area. That’s fine, but if we look forward just a few years, this area of advice is the ONLY way accountants will be able to secure recurring fees that compensate for the reduced level of compliance fees that clients are willing to pay.
Strategic Business Advice requires the application of insights, hand-holding and support tailored to suit individual clients.
You will be better prepared for the future if you are ahead of the curve in the development of your ability to provide valuable Strategic Business Advice to clients AND to get paid for doing so.
The biggest challenge
However challenging you may find my earlier observations there is one more that’s even tougher.
Clients typically only ever look for an accountant because the client needs help. Most commonly that help is perceived to be to assist with enabling the client to fulfil challenging legal obligations. That may be a statutory audit, filing annual accounts, filing tax returns or responding to HMRC enquiries.
As recurring compliance obligations become simpler over the next few years so we are seeing them being increasingly commoditised. And thus we will see fees for compliance related services falling. This trend is going to become more apparent over the next couple of years. There is no going back.
So here’s the big challenge.
When are you going to make the time to develop, practice and refine your ability to promote your Strategic Business Advisory services.  There will be no legal obligation on clients to engage an accountant (or anyone else) to provide such services. And you will be competing with trained business coaches. They may not have your accountancy skills or experience.  But they have been honing their selling skills for years!

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