Having just attended Xerocon Brisbane, I’ve had a solid dose of ‘Advisory Rhetoric’.
You know how it goes - the compliance world is dying, technology and AI will make many services redundant, and the advice for accountants is they just need to rely on their Trusted Advisor status and do more advisory work. Enough. I call time out for two reasons:
Number 1: Everyone is talking about it, but who is actually doing it?
In New Zealand, we have a saying - ‘too much hui* and not enough do-ey’. Everyone is talking up advisory services as the ‘Holy Grail’ that will save accountants from extinction. But how many firms actually walk the talk?
At Xerocon, I asked firms about the advisory services they were currently delivering to their clients. Responses typically fit one of three categories:
Blame: ‘We offer advisory services, but our clients don’t buy them unless the bank requires it.’ Meaning they’re listed on the firm’s website in ‘Accountanese’ (e.g. Due Diligence, Restructuring, Corporate Recovery, Strategic Business Planning, etc.) and the client doesn’t understand what they are. These advisory services are performed upon request, but because clients aren’t requesting them, firms aren’t delivering them often.
Excuses: ‘We know we should offer them, but we need to get our ducks in a row first…’ These excuses ranged from software platform upgrades, to restructuring, to recruitment struggles, etc.
Denial: ‘We’re so flat out with our current workload and can’t see this changing anytime soon.’ In other words, there’s not enough pain in the business yet for us to change.
Until accountants recognise the fact that they have a duty of care to teach their clients to run a better business, we’re not going to see any massive change. We’ll be talking about advisory for another 20 years. It’s hardly a new concept; Paul Dunn started The Results Corporation in 1980, David H. Maister wrote The Trusted Advisor in 2001 and Amazon.com lists 412 results for books on business advisory services. Too much talk and way too little action.
Number 2: Advisory is not only the wrong word; it’s also the wrong answer.
Businessdictionary.com defines Business Advisory as:
A range of consulting services provided by Certified Public Accountants (CPA) and other financial advisors to businesses and high net worth individuals who require specialised advice on capital formation, cash flow and wealth management.
But, how many SMB owners wake up in the morning and say ‘I think I’ll seek advice on capital formation, cash flow and wealth management today’? And, if they did, would they engage their accountant?
My beef with the advisory word is that it assumes that the accountant has all the answers.
The client just needs to pay the accountant for advice and all their cashflow issues will be resolved. Of course, this is rubbish. If it were that simple, the client would have successfully Googled the answers.
A collaborative approach across disciplines is needed.
SMBs are experts in their field, as are accountants. A true synergy is achieved by combining the expertise of the client with the expertise of the accountant - one plus one equals five.
Often the accountant just needs to ask better questions, to drill down and get context. To discover the root causes of the client’s problems rather than providing ill-considered advice based on the symptoms (applying a band-aid).
For example, if a client has a cashflow crisis (the symptom), there could literally be hundreds of root causes: poor pricing, inefficient billing or collection, rework, excessive drawings, poorly financed investment… Asking better questions will allow the accountant and the client to find a better solution together.
Providing endless advice doesn’t teach clients to run a better business - it creates a dependency on the accountant. Why not empower your clients to build a better business by coming up with ideas together? Then, hold them accountable to implementing those ideas.
If advisory is the wrong word, what is the right one?
Business Development. Forbes defines this as:
The creation of long-term value for an organisation from customers, markets, and relationships.
An accountant can’t provide enduring value through advice alone.
The accountant needs to understand, and be confident in the fact, that they don’t have all the answers. Sometimes, they need to extract the answers from the client by asking better questions (be a coach). Often, they must utilise their experience and expertise and work with the client (be a mentor). Or, perhaps they simply perform a specialist service to help the client (be a consultant).
It’s a crying shame that the term Business Development has become synonymous with sales and marketing.
Sales and marketing are just two things that SMBs need help with. And yes, accountants can provide enduring value in those areas - as well as in the areas of: leadership, governance, business planning, strategic planning, succession planning, organisation structure, performance management, financial awareness, accountability - the Business Development opportunities list goes on.
One things for sure, you cannot provide these services purely by advising.
So, where do you start? I’m adamant that EVERY business needs three essential business tools:
- An annual Business Plan.
- An annual Forecast.
- Regular reporting and accountability meetings.
Consider how much you could help your clients by prioritising just these services!
It’s time to distinguish your offering from vague advisory. Play your ‘Trusted Advisor’ trump card where it matters most and deliver valuable Business Development services to your clients. Accountants aren’t in danger of extinction… provided they adapt and evolve - just as their SMB clients have too.
Check out The Gap, and how we’re helping accounting firms around the world help their clients to run a better business through systemised, monetisable Business Development services.
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* Hui is the Māori word for meeting.