Should accountants also act as business advisors?
It is increasingly common for accounting firms to take on the role of trusted advisor to their clients. With many companies offering advisory services alongside their accounting, auditing and tax services, it is now expected that advisory services will be offered jointly.
Potential clients will often come to accounting firms with a problem, sometimes because their current accountant can’t help or doesn’t have the relevant experience. In this case, they will wait for counseling services. Being able to identify the broader business and financial issues facing a client and offer them appropriate advice is therefore what can distinguish an accountancy firm from its competitors.
As a result, accountants often describe themselves as both accountants and business advisers. But what is the difference between the two roles and how do they overlap?
Traditionally, accountants examine historical information, such as mitigating tax liabilities, and conducting an audit. These services are compliance driven.
Business advisors, on the other hand, look to their clients coming. They have a fuller picture of what their clients’ businesses are and what they want to achieve. They can then directly help their client achieve their goals or introduce them to others who might be able to help them.
So in practice, business advisors have more conversations about current (and future) numbers, whereas traditional accountants tend to work more with historical numbers.
There are many advantages to merging the roles of accountant and business advisor.
For an accounting business, the main advantage is the ability to retain existing customers. Offering both services allows you to build better relationships of trust with the companies you work with, while demonstrating how you can fully support their strategic goals.
Advisory fees also offer a better return than compliance fees because they are based on value and not on what could be considered a basic service.
Adding consulting services to your offering is also useful for retaining and attracting staff, as a combined role can make the job more interesting than a traditional compliance role. As advisors, staff are able to undertake a much wider range of tasks.
Compared to the positives, there are few downsides to merging the roles of accountant and business advisor. But it’s still important to consider any potential issues when considering becoming an advisor.
Of course, it’s possible that adding business advice to your offering could devalue your compliance work. Both components are equally important, so a balance must be found between the two roles, both individually and within the team.
For example, if a client is looking to sell, they will need three years of accounts – and that requires a good compliance department, using a highly qualified accountant.
When it comes to merging the advisory and accounting roles within an accounting firm, the benefits far outweigh the potential drawbacks. As tax advisory services become more and more integrated with accounting, most clients are looking for advice on how to structure their business in a tax efficient manner. That’s why getting close to your clients and fully understanding their goals is essential if you want to add business consulting services to your offering.
Ultimately, it’s being able to offer both services combined – at such a high level – that will put you ahead of your competition.
By Andrew Moss, Partner at DSG