It is becoming increasingly common that accountancy firms take on the role of a trusted advisor to their clients. With many firms offering an advisory piece alongside their accountancy, audit and tax services, it is now an expectation that the advisory services are offered in conjunction.
Potential clients will often come to accountancy firms with a problem, sometimes because their existing accountant can’t help or doesn’t have the relevant experience. In this case, they will be expecting advisory services. Being able to identify the larger business and financial issues faced by a client and offer them appropriate advice is therefore what can distinguish an accountancy firm from its competitors.
As a result, accountants now often describe themselves as both accountants and business advisors. But what is the difference between the two roles, and how do they overlap?
Traditionally, accountants look at historical information, such as mitigating tax liabilities, and performing an audit. These services are compliance focused.
Business advisors, on the other hand, look to their clients’ future. They have a fuller picture of what their clients’ businesses are and what they want to achieve. They can then help their client achieve their goals directly, or introduce them to other people who can help.
So in practice, business advisors have more conversations about current (and future) figures, whereas traditional accountants tend to work more with historic figures.
There are many benefits to merging the roles of accountant and business advisor.
For an accountancy business, the main advantage is the ability to retain existing clients. Offering both services allows you to build better, more trusted relationships with the businesses you work with, as you demonstrate how you can fully support their strategic goals.
Advisory fees also offer a better return than compliance fees as they are based on value not what might be viewed as a commodity service.
Adding advisory services to your offering is also useful for retaining and attracting staff, as a combined role can make more interesting work than a traditional compliance role. As advisors, staff are able to undertake a much more varied range of work.
When compared with the positives, there are few drawbacks to merging the roles of accountant and business advisor. But it’s still important to consider any potential problems when thinking about becoming an advisor.
Of course, there is the potential that adding business advisory to your offering could devalue your compliance work. Both components are just as important, so a balance needs to be struck between the two roles, both on an individual level and within the team.
For example, if a client is looking to sell, they will need three years of accounts – and this requires a good compliance service, using a highly skilled accountant.
When it comes to merging advisory and accountancy roles within an accounting firm, the positives far outweigh any potential negatives. As tax advisory services become more integral to accountancy, most clients are looking for advice on how to structure their business in a tax-efficient manner. That’s why it’s essential to get closer to your clients, and fully understand their aims, if you are looking to add business advisory services to your offering.
Ultimately, it is being able to offer the two services combined – to an equally high standard – that will put you ahead of competitors.
By Andrew Moss, corporate partner at DSG