Chairman of the Tax Advice Network and BookMarkLee
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Are you an accountant, a business adviser or both?

20th Apr 2015
Chairman of the Tax Advice Network and BookMarkLee
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It has become increasingly common for accountants to describe themselves as ‘accountants and business advisers’.

The accountants and firms that do this may or may not charge extra fees for providing clients with business advice.

Some marketing experts encourage use of the longer phrase as a way of distinguishing the firm from all those local competitors who are simply ‘accountants’. It is unclear whether all rebranded firms start giving business advice or just continue doing what they have always done. 

Only some of them explicitly offer business advice as one of their services. I have heard many tales of ‘accountants and business advisers’ who still limit their work and advice to the traditional areas, by which I mean clients do not perceive they receive any business advice.

That is the reason for my initial question: Are you an accountant, a business adviser or both?

This article will enable you to decide whether it would be appropriate and beneficial to describe yourself as a business adviser, as well as an accountant. Note that I am not advocating that you do this, unless you feel it would be right to so do.

Let’s start by considering accountants who do not highlight their ability to provide business advice. This could be for a number of reasons, such as:

  1. Lack of interest, confidence, knowledge or experience – resulting in an absence of business advice to clients
  2. It just comes naturally and feels right to provide such advice when engaging with clients, but it’s not a separately billable area of work
  3. Never considered it before
  4. Dislike of watering down the ‘accountant’ branding

Only you will know which of these is relevant to your own approach.

Are you a credible business adviser?

Where do accountants get their knowledge, expertise and experience from, to offer business advice to clients?

Personal experience: From running your own practice, prior in-house finance roles or simply from working with other clients?

Research: This supplements and brings you up to date by reference to information gleaned from recent books, blogs, articles and conferences.

Systems: Perhaps you have bought into a programme that assists you in adopting a structured approach to the provision of business advice.

There are different approaches you can adopt as regards business advice too. For example:

  • The provision of regular business input and advice from a quasi non-exec perspective. Beware if you do this, that you do not overstep the mark and get so involved that you are either conflicted out of your audit work or could be deemed to be a shadow director
  • Acting as a business coach encouraging, challenging and supporting clients to achieve greater success than they might otherwise have thought possible
  • Simply being at the end of a phone and the first port of call for any business related challenges that arise - not that you or the client expects that you will be able to advice on all such matters yourself. But where it’s outside your comfort zone you invariably know someone who you are happy to recommend. See: 25 collaborative work opportunities for accountants.

If you have limited knowledge, skills and experience I would strongly discourage you from raising anyone’s expectations that they might get business advice from you. Providing business advice in such cases could be unethical and unprofessional.

On the other hand, if you decide to reference your ability to provide business advice, you will need to evidence your ability to be a constructive and credible business adviser.

Would it suit your current client base?

Time and again I hear business owners complaining that their accountants fail to provide business and tax advice. They simply do the books, produce tax returns and tell the client how much tax to pay. 

Of course that basic service is all that many clients require or will pay for. Others may need to be educated as to the value of the additional advice you could provide over and above the basics.

An increasing number of accountants offer regular business advice as an optional additional service, often alongside regular reviews of management accounts and business plans. How far you stray beyond the financial side of things will depend on your experience and knowledge.

You simply need to know your limitations and avoid getting drawn into offering advice based on heresay and rumour unless you qualify it suitably.

If you have sufficient business clients who could afford to pay you more than they currently do then you may want to promote your ability to offer them business advice.

In addition to your own knowledge and experience you could also provide advice by reference to relevant software tools, resources and checklists. Many variations of these are available on the market and can help you to develop your business advisory function. My advice would be to research what’s currently available and see what is best for your firm. Whilst the software tools and checklists are a real help, they won't do the job for you and you need to be committed to spending a little time in making them work for your business.

“Clients won’t pay for it”

Some accountants who might be interested in providing business advice to clients have decided that their clients wouldn’t pay for it. This may well be true – depending on the client base in question.

In such cases I would suggest that it's worth considering whether continuing to be simply an ‘accountant’ is limiting your ability to attract the larger business clients you seek.

These may be looking for someone who is both an accountant and a business adviser. This will depend partly on what service they have received to date, in addition to the service they thought they were going to get from their current ‘accountants and business advisers’.

Does it come naturally to you?

Not all accountants have the personality, interest or ability to give valuable business advice. This need not preclude you from encouraging clients who would benefit from it and pay for it to obtain it from a trusted source.

It is both professional and generally appreciated by clients when you introduce suitable third parties who can provide advice the clients need. This includes any form of business advice if it’s not something you are able to provide yourself.

Could you learn from your peers as to how they provide business advice to clients? Maybe it is less daunting than you think it would be. Perhaps the fear of working out how to package, promote and bill for business advice is worse than the reality – which could also be quite profitable.

Conclusion

Most accountants in practice who have business clients are capable of providing at least a modicum of business advice. This is especially the case if their training was sufficiently broad and they have been taking an interest in clients’ affairs and/or they held in-house finance roles before moving into practice.

If that’s the case for you then you are probably both an accountant and a business adviser. Do you agree and do your clients know?

Mark Lee is consultant practice editor of AccountingWEB. As a speaker and mentor his focus is on helping accountants who are determined to be more memorable and successful. He also facilitates The Inner Circle group for accountants and is Chairman of the Tax Advice Network of independent tax specialists who provide support to smaller practices

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Replies (24)

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Adrian Pearson
By Adrian Pearson
22nd Apr 2015 08:37

How many accounting practices are successful businesses?

Hi Mark

I wonder how many of the circa 25,000 accountancy firms are themselves successful businesses? Businesses that generate profits above a working wage for the proprietors and that can run without the need for the proprietors to be there?

Can I suggest that only those passing this test can even start to consider offering themselves up to unsuspecting clients as business advisers?

For the remainder, happy to make a good living from a business and clients they enjoy (and why not) then what they should focus on is making the best and most efficient job of their traditional compliance work.

Adrian
www.checkmybooks.co.uk

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By johnjenkins
20th Apr 2015 14:39

This is a very

interesting article, Mark. Going back to my training days I found it natural to advise on business and tax matters.

I have to admit, although I have a natural tendency to observe and adapt, over the last few years I have started to realise that it is becoming increasingly more difficult to keep up to speed. This is mainly due to the aggressive nature of HMRC and the financial institutions wanting to know what colour underpants you have on (red is a no no) before they grant a mortgage.

So I find myself asking the question. Was it easy then and now it's how it should be or was it "right" then and now it's just greed? Or is there another hidden agenda?

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By jon_griffey
20th Apr 2015 17:07

What does it mean?

I dislike this 'business advisers' description, and choose not to use it.  What does it mean? 

Are 'business advisers' leaving themselves exposed to claims by failing to advise on common business issues like health & safety, waste licences, PAT testing etc? 

Do any engagement letters actually define what areas of business advice is to be given?

Accountants are seen as the business experts but accountancy training only deals with the financial aspects, and if you are a manager or partner that has just risen through the ranks you will have no first hand experience of running a business to draw on.

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By johnjenkins
20th Apr 2015 18:08

@jon

Surely by dealing with other business in training you pick up the does and don'ts of how to run your own business, unless your a number cruncher. Of course there is no training like experience. As Mark points out, it could come naturally so you would be advising without thinking about it. An experienced driver wouldn't think about changing gear.

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By carlreader
20th Apr 2015 19:12

I agree 100% with Adrian...
... But draw the line at taking liability for not advising on PAT testing, Jon!

My advice is generally strategic, and as such, details like that are a million miles from the advice given.

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By David_Lewis
21st Apr 2015 10:01

Different drivers

Different businesses have different drivers -so running an accountancy practice, doesn't necessarily qualify you to advise on running a tech business, a manufacturing business, a farm etc etc.

 

Personally I think the term business advisor is very generic- how many accountants are experts in sales & marketing in other sectors (or even their own).  There are also plenty of accountants who aren't great on cash management at a practical level, which is fundamental to any business and is arguably something that would reasonably expected of any accountant who is a business advisor.

 

While advice may be given, it is essential that the client understands the limitations of any advice being given. 

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By johnjenkins
21st Apr 2015 10:34

@eddybee

There is not much difference on the basics of running any business. The difference comes with speciality knowledge of that particular business and its environment.

So really it's all down to training we have received and how we adapt that training to our own business.

It doesn't help when so called "experts" start pontificating and expect everyone to follow the "trend" of a particular era. The current one being "the cloud".

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7om
By Tom 7000
21st Apr 2015 11:58

How many firms run would run if the boss wasnt there?

Said the first comment.

Well PWC and Deloitte spring to mind. Guess you have to be in the top 100 or thereabouts.

I have 24 helpers and would it run without me. It would if I hired a someone to do my job...I guess I could then sit on a beach, but I would be bored...

 

99.9% of small clients are not interested in paying for it 0. 2 % are. Thing I find is you sit there and give them a bit of advice and half of the 0.2% will listen and the other 35% wont. Not sure it matters tbh as long as you get paid.

 

You could spend ages mentoring a client helping with acquisitions growth sales and marketing recommending new staff etc etc But it did occur to me...why bother why tell them what to do why not do that acquisition yourself and make the big bucks rather than the scraps of a few fees....

 

I put Chartered Accountant on my sign...if they ever threw me out I would then be an Accountant and Business Advisor ...

 

Tom

Ps Our client base is currently running  at 100.1% if you hadnt spotted that ;) slight over demand

 

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By David Gordon FCCA
21st Apr 2015 12:15

ac training

 

 Dear john:

 If your training only dealt with the "Financial aspects" you should kick your original principal's bottom.

 Apart from those who go straight from college into the big four firms. Most of us, I would guess, learned a great deal about how not to run a successful business.

I had the privilege of being in a competent ethical firm during training. That firm dealt mainly with small businesses and or family companies (Which actually may be quite large). I could not but help absorb a great deal of business management knowledge.

Whether one can themselves run a successful business is in the first instance a gift from God. Similar to playing a piano. If you are not musical in the first place, no amount of training will help you.  That should not stop you appreciating and understanding the "Music".

 The point is, you quickly learn that what one business person may think is a unique problem, in fact you have seen in any number of clients. This means that frequently you are able to help them cope with the problem.

Further, we are here talking about enterprises which are not large enough to employ dedicated financial, sales, or production, specific directors and the like.

What the owners/ directors frequently desperately need above all else, is someone to talk to, whom they may trust, and who is not trying to sell them the latest wizz-bang magic wand. In this sense many of us are useful and valued business advisers. Why should we not advertise the fact?

 

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By johnjenkins
21st Apr 2015 12:32

@David

Its seems as though we had a very similar training. I wonder how many trainees, these days, actually want to learn the full monty, as there are so many modules to choose from. 

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By Jonathan Mann
21st Apr 2015 12:58

The "trusted" advisor.

My experience is that many owners and directors of SMEs, particularly those who lack professionally trained internal resources (be that financial, legal, property etc), rely on a series of trusted advisers to help them make business decisions.  I see no reason why an accountant shouldn't be one of them and I think many business owners welcome it. 

The more time one spends in practice or in industry the greater the wealth of experience one build, be it business or financial.  If you are so inclined and enjoy doing so, why not share your experience and knowledge so others can benefit from it (and earn more money from doing so at the same time). 

I have always measured the quality of relationship with a client by the breadth of matters we discuss. Once you have built the level of trust with a client such that he values your judgement, and you have earned you place as trusted adviser, there is scope for advice on a variety of areas. Importantly general business and commercial advice may well have as much or even more perceived value to your client than say a signature on an audit report.  In my experience, relationships where you become a trusted adviser rather than just the auditor or tax accountant are much stronger and longer lasting.   The important factor in building these types of relationships is a willingness to "invest time".  "Time" means making time to chat informally about wider matters and finding out if a client values it.  "Invest" means not charging for every minute of your conversations, but waiting until the conversation provides genuine value to the client.    

I see fears expressed by Jon above about not being expert enough.  Jon - it is simple.  Don't advise on areas you don't know much about or aren't comfortable with... and if you are giving informal opinions, make it clear that is what you are doing at the time. 

I personally find that a large proportion of my "business advice" to clients is a mixture of technical knowledge, business advice and business coaching.  I like to think I am helping business owners make their own decisions about what is right for them, rather than simply telling them what to do.  Hopefully they think that too.

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Replying to Dannywingate:
By jon_griffey
21st Apr 2015 18:47

Client expectations

Jonathan Mann wrote:

I see fears expressed by Jon above about not being expert enough.  Jon - it is simple.  Don't advise on areas you don't know much about or aren't comfortable with... and if you are giving informal opinions, make it clear that is what you are doing at the time. 

That is quite correct but that's not where the problem lies.  The danger I see is more one of the scope of the engagement and client expectations, i.e. when something goes wrong, will the client be asking why their business adviser didn't advise them? 

By using 'business adviser' in the firm's title, are they not holding the firm out as offering some broad expertise in all business matters, that is not available from 'run of the mill' accountants?  I bet that very few such firms make any mention of the scope of business advice in their letters of engagement.

In fairness I am probably highlighting a risk that is fairly remote.  But I remember a client once who got fined for not having a waste carrier licence and him shouting at me that I should have told him about it.  Would holding myself out his business adviser risked creating a duty of care?

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Della Hudson FCA
By Della Hudson
21st Apr 2015 14:24

Business adviser and Chartered Accountant

For the last few years I have resisted the business adviser label as I think it is just part of being an experienced Chartered Accountant. I recently gave in as I watched yet another so-called business adviser presenting a poor business plan with basic errors. (I do realise there are good advisers out there who aren't Chartered Accountants but I seem to see more of the weak ones). We use our trusted adviser role, financial training, business experience and research along with enough sense to know when to call in the marketing, health and safety, legal experts etc within our network.

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By timmypunk
21st Apr 2015 15:20

Business Advisor

I very much find I am becoming a business advisor , but being CIMA ,and virtually apart from last 12 months , worked in Industry , covering , retail, construction , pub trade ,waste management , manufacturing and overseas and not-for-profit .Along with this managed the payrolls, pension, insurance , acted as HR Manager and Health and Safety Manager

 

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Mark Lee 2017
By Mark Lee
21st Apr 2015 19:19

Client expectations

My own preference would be only to add the words 'business advisers' if the accountant either:

1- Enjoys offering pro-active business advice on areas within his/her experience and knowledge as part of the recurring annual service; or

2 - Offers an extra 'business advisory' service, over and above the more standard recurring services, and bills specifically for this - on terms set out in advance.

You cannot legislate for clients who have unreasonable demands. You can try to educate them to manage their expectations but that won't always be sufficient to stop unfair complaints.

Can a client successfully secure recompense for a negligent failure by their accountant to provide business advice?  

To succeed the client would need to show that:

they have a suffered a material loss that is directly attributable to that failure, that the accountant owed them a duty of care to give the advice AND that a reasonably competent accountant would have given that advice.  

That's a pretty high bar so I wouldn't worry too much about it in the context of this discussion.

Mark

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By agknight
21st Apr 2015 22:04

'Everyone Thinks they Are a Retailer'

These were the remembered words of the Butlin's Retail Exec when I as Finance Exec was talking about retail to him. And he is right. It only takes a second of reflection to realise that clever people with special skills run Tesco's etc, not accountants, although many of us walk around the supermarket every week and think we could do a good job!

It makes me cringe when I read that completing a business plan or knowing about the cloud might constitute as business advice. In fact the last place I would go to is a High Street accountant for business advice. They're unlikely to have worn the commercial t-shirt and are likely too risk averse.

By all means offer financial business advice, but unless you truly know about marketing (in the full discipline sense) and the industry in question don't go near business advice.

My only concession is if you are a very careful sounding board and manage to make the business owner think widely and deeply about his or her own decisions.

 

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By johnjenkins
22nd Apr 2015 09:26

Tesco's

mmmm didn't they just post losses of circa £5b. Yer that sounds like great marketing. Although I agree that Accountants shouldn't run Governments or business (apart from their own) but they should always be consulted and their thoughts taken into account.

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Replying to Wanderer:
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By agknight
22nd Apr 2015 09:40

Every discipline should have its individual voice heard, for the entrepreneur at the centre to make a decision. Where I wilt is with accountants, who have never operated anything outside of a relatively academic practice, giving the feeling that they could run a clients business better than them. Which it is usually pretty clear they couldn't because they just don't have the skill-sets.

 

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Replying to Cheshire:
By ChrisScullard
24th Apr 2015 16:31

You seem to assume that all small practitioners have only ever been small practitioners and worked for small practitioners.  There are a few of us out there that have held senior positions and directorships in PLC and SME environments before deciding to set up our own businesses.

 

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By johnjenkins
22nd Apr 2015 09:33

@Mark

If you have an honest relationship (which you should have) with your client, these problems don't exist. You discuss options with your client, and one of those options could be "expert" advice. I really think the whole process is getting to know your client and their business so that you can both decide the best way forward. On another thread Della seems to have captured that scenario and gone on to develope a successful business.

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By shirjackson
22nd Apr 2015 22:30

Some clients are not interested

Some clients don't want business advice from their accountant.  I think you have to be led by what the client wants. Clearly many accountants are competent enough to offer financial business advice and tax advice.  However, a good accountant know their limitations and should refer to a specialist rather than put the client and themselves at risk. 

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Replying to johngroganjga:
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By agknight
23rd Apr 2015 09:47

The Wrong Ones are Interested!

Sadly my experience is that the people that need a bit of guidance generally have difficulty taking it. You can just see it in their face when I am talking.

On the other hand those that embrace it, we have a great relationship, but they could easily run without it. They are successful because they listen and sponge from all comers, without initial rejection or fear.

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By johnjenkins
23rd Apr 2015 09:27

As Clint Eastwood

once said. "A man's gotta know his limitations". You have to say it in a husky Dirty Harry type voice.

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By AndrewV12
23rd Apr 2015 10:15

Good point

Its a very good point, 

Are you an accountant, a business adviser or both?

I would say the marketing men gave birth (?) to the term business adviser.   However I say if you have around 20 years accounting experience and are competent then yes you are a business adviser, not many will know more about businesses than you.    We see the information from every angle.  

 

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