When we enter into discussions with accounting firms seeking our advice, the first objective we often encounter is a desire to ‘do more advisory work.’ Perhaps it’s not surprising. Check out any accountants’ conference, workshop or webinar and the likelihood is that you’ll find rhetoric admonishing you to attend so that you can redesign your firm with a heavier bias on advisory services. Some consultants to the profession are still taking that advice to the extreme, suggesting that compliance is dying and firms will not survive unless they change immediately. It’s been the same old story for the past decade.

At Panalitix, we are not proponents of this extreme approach, but we certainly encourage our clients to think deeply about some of the challenges associated with changing their business models and make informed decisions on the extent to which they pursue advisory as a service offering. The five most common questions we find ourselves dealing with are:

1.  WHAT ARE ADVISORY SERVICES ANYWAY?

A simple answer is, anything that is not compliance. But perhaps this is better answered by considering what advisory is NOT. In our view, creating a report demonstrating trends in the business and giving that to the client is a nice value-add, but unless you have a conversation about what it means, it is almost worthless and will almost certainly go over the client’s head. As accountants, we believe you should stay close to the numbers and build a bridge from compliance into advisory. By definition, advisory implies that you will be ADVISING the client on actions they should take, not just showing them a picture of past performance. Which leads to question number 2:

2. WHAT SKILLS DO I NEED?

This is a very important question to ask. Accountancy exams equip us with strong technical skills, but few business advisory skills. If you’re wondering how to develop or learn the skills to offer your clients insight – the good news is that clients define insight broadly. It doesn’t have to be a radical new idea or inspiration. Advisors who are insightful do some or all of the following things:

1. They add significant new perspectives to the problem or issue at han
2. They help to focus the discussion on the most critical, relevant issues
3. They provide specific ideas and solutions
4. Sometimes, clients feel their advisors are insightful when, through artful questioning, listening and discussion, they enable clients to arrive at their own solutions.
5. Clients define their relationship with trusted advisors using words like “trust,” “shared values,” “integrity,” “chemistry” and so on. It’s far more than golf and lunch.There is no silver bullet here. Much of our own advisory work is focused on helping accountants develop these skills.

3. DO CLIENTS BELIEVE YOU / TAKE YOU SERIOUSLY?

You might be thinking, ‘why wouldn’t they? I am the trusted advisor.’ But if you’ve only ever offered tax and compliance services to a client, why should they believe you can help them improve their business? We need to manage that expectation gap by taking clients across that bridge from compliance to advisory in a methodical manner. Compare and contrast these two approaches (at the extremes, but you get the point):

1. “Here are your accounts and tax returns. Now let’s talk about how you can triple your profit.”
2. “We’ve prepared your accounts and tax returns and we also took a look at some important trends in your business. Let me ask you, do you know why revenue dropped by 10% from last year? Would it help to understand the key drivers of revenue, profit and enterprise value and to gain some clarity around where you should focus to get the biggest impact?”

Put yourself in your client’s shoes; which approach feels less threatening and more in line with what you expect from an accountant?

HINT:  you may need TRAINING in the sort of language to use in such consultations, and you will almost certainly need TOOLS to help you follow through on the conversation.

4.  WHAT PROCESSES ARE NEEDED?

Sometimes we encounter accountants who are clear on what advisory is, believe they have the skills and have strong relationships with clients. But they fall down because of a lack of PROCESS. How adept are you at pricing advisory work? How quickly can you turn around a proposal? How well do you manage opportunities so that they don’t fall through the cracks? How well do you manage the scope of engagements so that you can deliver them quickly, ensuring clients get fast results and you make a profit?

5. CAN I DELEGATE SOME OF THE WORK?

1.  A planning session, where you sit down with the client with a blank sheet of paper and at the end of the day, you’ve developed an action plan that makes sense

2. A goal setting session, where you use an intelligent tool and ‘follow the bouncing ball’ to gather two sets of data:a. The client’s goals for the next year, ranked in order of importance
b. The client’s assessment of the strengths and weaknesses of their business across a range of important business areas.And what if the tool could then run an algorithm across these two datasets to create a plan for the client that makes sense so that you could advise them where they should focus – and where they should not.

If all you are doing is creating more work for the partners, is it really worth doing? It is important to configure your advisory services so that your good, young accountants can get involved in data collection, analysis and reporting whilst partners operate at a strategic level on client projects. Compare and contrast these two offerings:

A planning session, where you sit down with the client with a blank sheet of paper and at the end of the day, you’ve developed an action plan that makes sense.

HINT: Take a look at PANALITIX’s Strategize module to see how accountants are empowering young professionals to deliver goal-setting services to clients as an entrée into further advisory work.

Perhaps the most important consideration is to undergo a Market Understanding exercise. Some of our clients have done this and concluded that they are perfectly happy providing low cost compliance services, delivered in a manner that produces a decent profit for the firm, and they have stopped worrying about trying to become business advisors. On the other hand, others have identified significant gaps in their service offering based on a deeper understanding of what their clients (and target clients) want from an accountant and they have worked hard to develop skills to deliver new services.

There is no wrong or right answer – but one thing is clear; simply saying you ‘want to do more advisory’ but then failing to develop skills and adopt tools to help you do that is the road to frustration. We would love to work with you to help you make an informed decision on whether advisory is right for your firm and if so, to help you develop a plan to make it a success.