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Over the past decade (or more), we’ve seen a great deal of focus on vertical services integration within the financial services sector. This has largely been lead by the push by accounting firms and other financial institutions into bookkeeping, financial planning, mortgage broking and insurance services.  At the same time, there’s been a lot of activity within the business advisory space. So, where has this ended up?

Following the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, there’s been a clear focus on divestment of financial planning and other services within the banking sector. With the Parlimentary Joint Committee on Corporations and Financial Services inquiry into the regulation of auditing in Australia reporting back in 2020, it’s likely that we’ll see a similar fall-out within the audit and assurance sector.

With these recent developments, it wouldn’t be surprising to see many financial services businesses going back to their core services and working with independent external specialists to provide value to clients in other areas.

Another area of ongoing focus for accounting firms that has had limited success to date is that of business advice beyond tax and structuring. Despite a push from both suppliers and external consultants to encourage firms to provide ‘forward-thinking’ advice to business clients, most accounting firms still provide this advice in an ad hoc manner, without any real leverage or focus. Sure, there are outlier firms that have made a successful transition from compliance to advice. But for most accounting firms, this is an ongoing challenge.

What issues have lead to this impasse?

The transition from compliance to advice is clearly more complicated than simply telling clients ‘we provide advisory services.’ Most accountants struggle to reframe the relationship they have with existing clients. Also, clients say they want more financial reporting and business advice, but they don’t seem prepared to pay for these services at a level that makes them worthwhile for accounting firms.

The lack of strong client relationship management (CRM) software platforms within public practice accounting has created a barrier to effective sharing of information and targeting of clients. As a result, firms still struggle with effective internal integration of services. It’s often quite difficult to present a consolidated view of clients and the services they receive.

Where services are provided on the basis of different pricing and payment plans (including annuity, fixed fee, time cost, commissions and results- based remuneration), there’s often a conflict in the perception of value from specific services. A a time cost approach to pricing is transparent but it also leads to confusion in relation to the value of services received. How can firms communicate value of advice when it’s often quite a subjective experience from the client’s perspective?

Accountants trying to move into advisory services continually get drawn back to compliance.  The outsourcing of compliance services together with efficiencies created by technology has to some extent created capacity for growth of advice. However, without effective leverage, advisory services will continue to be provided in an ad hoc manner.

There’s been some progress in the support that accounting firms can provide clients in relation to bookkeeping, financial reporting and commercial accounting services such as payroll, creditor and debtor management. However, firms grounded in a time cost approach to pricing will often find it quite challenging to move to a fixed fee model required by clients. Scope creep often results and it can be difficult to manage client expectations.

Finally, there are significant cultural differences in the ways that different professionals engage with and provide financial services. This causes ongoing friction, even in the firms that appear to focus on cultural integration. Inevitably people tighten their grip on clients when they feel that the service provided by others is inconsistent with they way they manage their clients.

What’s the best way forward for accounting firms?

Whilst we’d like our professionals to have broad experience and capabilities within all areas of financial advice, generalists are in the main unlikely to become experts in multiple areas of service focus. There’s simply too much information and clients want specialist, independent advice. It’s clear that many clients prefer independence in the advice they receive even if there are synergies in a ‘one-stop shop’ approach.

There’s an opportunity for accountants and specialist advisors to work together to provide a stronger service to clients. Rather than training our professionals to provide both compliance and advisory services, we should create room for both the compliance and advisory manager / partner.

Generalist accountants need to be strong communicators and effective analysts to really see beyond the numbers. For sole practitioners, the best path focuses on developing strong relationships with external professionals and acting as facilitators in forward-focused projects. Multipartner firms are evolving into multidisciplinary firms, with leaders and managers having specialist focus in areas including tax, accounting, financial planning and business advice.

For all accounting and advisory firms involved in delivering services to client, a strong focus on collaboration, communication and CRM systems is essential for effective leverage.

What is your firm’s strategic plan for integration of services to add value to clients?  What’s the best way forward?  

A focus on communication strategies is essential to identifying opportunities to add value to clients. The eLearning courses provided by CPD for Accountants provide accountants, managers and partners with the skills they need to effectively engage with clients. CLICK HERE to view our courses