Nick Hixson, a long-standing collaborator, who has provided ideas and support as we have built LandmarkPD, sent me an inspiring article on the imperative to embrace advisory services. It is reproduced in full below. I particularly like the refence to ‘sticky clients’…
Enjoy the read.
Bob Edwards, Founder LandmarkPD – April 2022.
The advisory conundrum
Every accountant is aware there is fee pressure on compliance services. If it’s not bookkeepers trying to get a piece of the pie, then accounting software is stepping into the breach.
And be wary, this pressure on compliance income streams can only increase.
Gone are the days when most of our work can come from compliance services. But it is hard to move from what we have been doing all these years, which has been paying all the overheads and the salaries and providing us with a living, and then jump into advisory.
What is advisory work anyway?
We have been doing it all along except it has not been a major feature of our work. It has come from the conversations after we have done the compliance work or when the client rings up and asks a question.
Advisory does not have to be about additional learning on our part or having products that you have to train your team on and then try and sell. We all know how difficult it is for accountants to sell anyway. It is not in our nature. We are there to advise. There is a hint. Advisory cannot be that difficult if our raison d’etre is to advise.
A fundamental shift
What we need is a change of mindset. Our existing model is predicated on charging for every available minute because that is our product. Our time is what we sell.
Well, is it?
What we are selling is our expertise. If we stick with time as our measure, then cheaper market entrants will beat us. If we sell expertise, we can maintain our position as trusted advisors and be the first port of call for our clients.
To do that we may need to bin the timesheet or allow for non-productive time during the week – for everybody in our team.
How a hotel does it
We have just been away to Malta for a week. We stayed at a good hotel and the overwhelming impression we got from the hotel was not one of efficiency, cleanliness and a pleasant environment. These are now hygiene factors. We expect these in hotels. The overwhelming impression was that the staff in the hotel talked to us. Not just about what they were doing or what they were bringing us or what we wanted but engaged us in conversations. There was capacity built in, so that they could all spend a moment with us. That started with management and went down to the gardener. Everybody would stop and there was a short conversation.
What we need to do
We need to build capacity into our team so that they can have conversations with clients. We know that conversations lead to more work. They also lead to better relationships and less likely to be transactionally inclined and prompt clients to go for a cheaper alternative just because it is cheaper. If you allow your clients to only measure you on simple criteria, namely, cost and timeliness, then they will do so. And if their expectations are simply that you and every other accountant produces accounts on time, their only other measure is cost. You are giving them carte blanche to find somebody cheaper.
If you develop relationships that engage with what clients do, if you understand them better, or will do something for nothing occasionally just because you are nice people and you are helpful, then they are more likely to value you differently.
They will not be able to develop that measure of value with anybody else because they will be stuck to you. You want sticky clients.
Costs and benefits
There is a cost to this. There will be some non-productive time. Most of it will be at partner level. Partners are more likely to pick up the phone or meet a client just because, to find out how they are, but it’s no hardship for you to tell your team but they can ring the clients to simply talk to them; that they are not driven completely by their timesheet and they are not measured completely by that either.
There is a cost to not doing it too. The gradual erosion of your practice’s compliance work by cheaper entrants and higher staff turnover.
Pay rises and promotions should not be predicated on productivity. It is difficult enough to get good people, let alone keep them. We all know how expensive it is to get new people, and train them, only to see them leave after a brief time. We need to retain our team. Allowing them to function as they see fit in your and their best interests takes pressure off partners and gets the best out of your team. That is another win for you – they are more likely to stay if their job is rewarding and they can be rewarded for doing better, rather than for doing more.
You want your clients to be able to talk to you before they make financial decisions – that you do not have to pick up the pieces afterwards and then charge them for something which has already cost them dearly.
Making sure that they can speak to you and feel they will not be charged for every five minutes of your time will be a benefit to both of you.
Save time – why reinvent the resource wheel?
You can introduce simple tools that are cheap and quick to implement, by using the Landmark Fee Builder and Spotlight services. These tools allow you to capitalise on the conversations that you and your team have with clients. They can be mentioned during the conversation, so ensuring that you are seen by your clients as having answers to their concerns. It is not a sales pitch; you are solving their problem.
New work will come from this approach. It will be work that you are able to do, and it will be work that will be very much valued by your client and be willing to pay for and you will have made them stickier clients.
About the author of this post
Nick Hixson runs a full-service small practice on the South coast but specialises in management and leadership. His doctoral research was in small business decision making. He is an Associate of the Peter Drucker Society and co-edits the Global Drucker Forum blog. He is also Chair of the Advisory board of the World Institute for Action Learning.