How to enhance links between accountants and IFAsby
Why do accountants get the heebie-jeebies when you mention the phrase “financial services”? The time has come to pay more attention to what business clients are looking for and to help them find the right advisers for all their needs.
The advisory world is made up of a Venn diagram of overlapping professions. For example, accountants and lawyers will often collaborate on a client issue.
If a company wants to issue some new shares, who deals with it - the lawyers or the accountants? It could be both: one drafts the shareholder resolutions and the other deals with Companies House. It’s no big issue - it just needs co-ordinating.
When it comes to financial matters the intersections can get confusing. Share issues involve a factual process, with a legal framework that will be common ground for both professions. Finance matters can be more intangible, relating to client goals, objectives, or, perhaps opportunity and risk management. Advice in these scenarios is not always grounded in Companies Act legislation, the territory space of lawyers and accountants.
It’s all about the client
It’s entirely possible to consider the share issue process from the client objective, rather than a pure compliance aspect. Just ask, what are the human drivers?
- Is the client in growth mode?
- Do they have corporate (and personal) liquidity problems?
- Are they looking at succession planning and bringing on new management?
- Are they preparing for a liquidity event in the future?
The share administration activity is the output of a client desire and represents the soft underbelly of your relationship with clients.
In an ideal world accountants would have a process that surfaces client goals and objectives and gives them the understanding to support the client on an ongoing basis. Clients rarely say they are motivated by “issuing shares”, they are more interested in building a business to meet their current and future lifestyle objectives.
The accountant needs to set this kind of relationship in place to become the “go-to” adviser. From that position you can execute matters within your own remit or co-ordinate and channel things to other advisors.
Working alongside the financial sector
For some reason just mentioning financial services can lead to an outbreak of the heebie-jeebies for many accountants.
Why is this?
- Lack of financial knowledge?
- Outside of your comfort zone?
To be fair, the profession’s misgivings could draw on a combination of the two factors. But it could also be down to a lack of adequate knowledge about your client (not their business) to be confident about talking about their personal affairs and connecting them to an appropriate financial adviser.
If a friend asked you for a restaurant recommendation you would probably ask quite a few questions before making a recommendation, such as:
- Number of people
- Lunch or dinner?
- Type of food they like
- Indoor or outdoor?
- Special occasion?
- Quiet or bustling?
The point is that advisers usually go through a thorough discovery process before making a referral or recommendation.
How many accountants have a structured discovery process to get to know their clients, their financial position, their short to long-term goals and ambitions?
Arguably, it is this client knowledge gap that inhibits accountants from making financial service referrals rather than lack of financial education. After all, most accountants have mortgages, pensions and life insurance themselves, and are reasonably bright.
Professional advisers of any type should prioritise getting good outcomes for their clients, not leaving the proverbial friend with no restaurant recommendations from you.
What do clients want?
Surely clients want an adviser who can relate to both them and their business? They work hard to buy a property, maybe refurb one or buy a bigger one. Do you have structured conversations with them to understand their motives and needs for pursuing this course?
If your clients feel you understand them personally, then you become the key adviser to help them make good financial decisions – allowing you to be more proactive about working with external financial advisers to meet their needs.
Understanding client financial needs is one thing, but interpreting the market is another.
The legal profession offers greater clarity. If you are a qualified lawyer then you are a qualified lawyer. From that point on, lawyers tend to specialise, some in employment law, conveyancing or perhaps corporate law; which in turn has many subdivisions.
The financial services industry looks at first sight to be an alphabet soup of titles and acronyms:
- Financial planner
- Wealth manager
- Asset manager
- Restricted adviser
- Financial adviser.
Consumers can struggle to differentiate and understand what advice they will be getting when there are so many interchangeable labels around. For example, an IFA could call themselves a financial planner, wealth manager or financial adviser.
The financial services market is evolving, with more advisors become specialists. The more you know about your client and their financial needs, the easier it is to signpost where they might go for advice. The person who specialises in mortgage advice, for example, will be unlikely to be the best person to manage an investment portfolio.
Good outcomes from client discovery
In summary, better outcomes come from better client discovery. Create a process to understand the business-owning client in detail and you elevate your role to that of the family CFO, overseeing family finances, not just the business plan.
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Richard Bertin is a Chartered Accountant, former chair of various committees and current ICAEW Personal Financial Planning Advisory Group member. He established and built up a successful fee-based wealth planning business, selling a stake in 2016 to Stonehage Fleming, the largest independent family office in EMEA.
He continued to further...