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Adding new services and shaking up your existing ones can be daunting – but with big change comes big opportunity. Let’s take a look at key areas for you to explore as an accountant ready for the future.
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Transforming from accounting practice to financial services practice
28 November 2016
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12 minute read
When I first started work in 1995 as a trainee accountant, I raised an issue with a partner in the practice. The concern was with the advent of MYOB bookkeeping software being available to small businesses to do data entry themselves (there used to be a lot of manual processing of cheque butts by junior accountants), and with H&R block moving in, would that have a large impact on our profession? His answer was quite a resounding ‘No.’ The reason? He said that 10 years before people were saying it would be the end of public practice, and ‘we are still here now, and we will be in future, it’s just the type of work we do that changes.’ Fast forward to 2016, and the same questions are being asked of the profession today.
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Reading of, and seeing first hand, the changes to the profession also has alarmists and spruikers alike saying the profession will come into difficulties (and you just need to buy our products so you can succeed). But is there merit to the argument this time? With automation of data entry making bookkeeping faster, the ATO telling us that standard business reporting will disrupt the industry and be a game changer, outsourcing offshore, and the so called commoditisation of compliance, it may make the most level headed practitioners start to wonder where they will be in ten years’ time.
However, I’m a glass half full person. With big change comes big opportunity. As an example, because bookkeeping has historically required high levels of low cost labour time, our practice has never been involved in any bookkeeping for clients. This year, because of increased automation possible in software, we have introduced bookkeeping as a service - and it has been a great success so far with our clients. We have automated clients bookkeeping and they are extremely happy because overall bookkeeping fees have dropped, and the quality has increased as our accountants supervise the bookkeeper in the firm. This also pays dividends when it comes to preparing the annual financial statements and tax returns as there is no double handling, and the quality of the data is higher.
We have now started thinking about also having a value added management accounting service because it ties in well with the month end bookkeeping processes for clients and will assist them with managing and growing their businesses. Even if the client has a fixed budget for their accounting spend per year, they have the capacity to pay for new management accounting services because the bookkeeping is done in less time and their budget would allow for it.
Financial planning
The removal of the accountant’s exemption has also created opportunities for accountants that are willing to adapt and change. As AFSL authorised representatives, the first SOA we produced to commence a pension was cumbersome and difficult. However now we have created templates the process is very efficient. From that baseline of offering strategic financial planning advice with a limited licence (allowing us to continue doing what we have always done), it has given us the experience of preparing SOA’s and is a stepping stone needed to transition our business into a general financial services practice if we choose to, rather than a traditional general accounting practice.
In collaboration with an AFSL holder, portfolios can be offered to clients now that have been developed and managed by the best in portfolio management. That way, as GP’s we can implement a full financial plan with products, without needing to watch if BHP shares go up or down today, and distract us from our core work.
Enhancing independence
As accountants, we have always valued and taken pride in our independence. That’s why accountants are seen as the trusted advisor – something unmatched and envied by many other professionals, including financial planners. If we expand our services to also provide product advice, doesn’t our independence increase if we can offer a broader range of, for example, superannuation options?
Challenges
Of course there are challenges to adding any new service. Thought needs to be given to resourcing it. Do we hire new staff for a service that does not exist in the hope we can generate enough work quickly to keep them busy? Do we hire a contractor and outsource for a period of time? Do we attract someone through an equity model as a lower cost option up-front?
Ensuring the quality of service is high from the first day the service is offered must also be given consideration. Also, reviewing the professional indemnity policy, and updating engagement letters is also required.
Being a sole-practitioner would present challenges if there are not enough experienced staff during the early stages of a new service. Also, just the demands on a sole-practitioner’s time can be a challenge to work on the business, rather than in it. However with a strong team behind them they too can continue to flourish in the future.
Alternative models
The alternative to an expanded service offering of course is specialisation, either technically or by industry. That can also work very well too, however practitioners do need to make a decision with which path they will chose. Being somewhere in the middle, with ever increasing competition, is not a safe place to be. Also, if you are going to specialise, you need to really specialise and not just pay it lip service. Too often accountants say they specialise in tax. But how do they differentiate that, against another practice down the road saying the same thing? Do they need to do, for example, a masters in international tax, to demonstrate that deep specialisation?
With streamlined financial planning products available, automation of data entry, and no real shortages in the skilled labour market that has been experienced in the profession in the past, practices that are able to see the opportunities in the profession, rather than the shortcomings and risks, have never been in a better position to expand and grow. The greatest benefits are that it will enable our practices to better serve our clients, and make for an ever more interesting and satisfying career for ourselves.
Travis Allen, director, Hillyer Riches
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