Are you conning your clients?
Your instinctive reply to the question posed in the title of this piece is probably “of course not”, says Mark Lee.
Indeed I’m quite sure that you, dear reader, are not conning your clients. Not knowingly at least. Anyone likely to do so is unlikely to be reading AccountingWEB. So why did I pose the question?
My inspiration was the musical comedy ‘Dirty Rotten Scoundrels,’ that I saw recently at the Savoy Theatre in London. The original film version in 1988 starred Michael Caine and Steve Martin. I don’t want to spoil the story for anyone yet to see the show. Suffice it to say that it revolves around two con-arts who compete to out-do each other, conning wealthy guests at a hotel on the French Riviera, who seem only too keen to part with their money.
I was hoping to see Robert Lindsay on stage in the lead, supported by Rufus Hound. Sadly the latter left the cast a few weeks ago and Lindsay was off sick. His part was very well played by his stand-in, Darren Bennett. The female lead was also played by an understudy – again, it wasn’t obvious. So, to be clear, I didn’t feel conned and I loved the show – despite never having seen the film or knowing the storyline.
The cons in the show are in stark contrast to the long-con approach adopted by the team in the TV series Hustle (which starred Adrian Lester and ran from 2004-2012). The Hustle crew only conned ‘bad’ people who ‘deserved it’. One lesson I recall being stressed throughout all eight series was that ‘You can’t con an honest person’.
What has all this to do with accountants in practice? Bear with me and I’ll explain some related thoughts.
Thousands of accountants claim to be ‘accountants and business advisers’. To my mind this obligates them to offer business advice rather than simply to focus on the annual compliance work. Of course there will be those clients who resist the idea of paying more than a basic fee and who therefore exclude themselves from benefitting from business advice. Equally there are, it seems, some accountants who rarely offer business advice – despite the implied promise of their nomenclature.
This is one of those marketing ploys that seems to be widely misunderstood. For example, none of us can really specialise in ‘SME clients’. The definition of SME covers over 99.9% of all UK businesses. Saying “I specialise in SMEs” carries little more meaning than saying “I specialise in working for any business, big or small, that is not in the FTSE 350”. By definition that’s not a specialisation.
The encouragement to identify our specialist clients comes from marketing advisers. They want us to make it easier for other people to refer new clients to us. This is easier if they can remember us as being distinct from the other accountants out there. One way to do this is to highlight your expertise in dealing with a particular type of client. This then becomes your specialist area. And it works. But we’re concerned that if we reference a specialism we might alienate those of our clients who don’t fit that specialism. And we may be rejecting those prospects who don’t fit the client profile of our specialist area.
As a result you will see many accountants’ websites claim they have specialisms in what seems to be all the areas in which their varied client base operates. Again, that’s not what it means to ‘specialise’.
What do you when you realise that a client, or even a prospective client, needs advice on an issue about which you have little or no real knowledge and experience? I know plenty of accountants who have the self confidence to, quite rightly, admit when this is the case. They then either encourage the client to seek specialist advice or they obtain this on behalf of the client.
Guessing what to do or failing to give appropriate advice due to inexperience or naivety is a risky game to play. Not only can the client lose out but there is also the prospect of a negligence claim or of disciplinary action when you’re found out.
I can recall plenty of occasions when readers of AccountingWEB have criticised those who charge high fees for the provision of high value advice – such as when huge tax savings are forecast as a result of incorporating a sole trader business. In principle I see no problem in charging value based fees if the clients willingly agree to this up front. But do they always have full knowledge of what other accountants would charge to do the same work?
We know how hard it is to obtain directly comparable fee quotes for what may, or may not, be the same service to be provided by different accountants. There are some accountants who simply charge an hourly rate regardless of the value of their advice to a client. Others believe that some accountants are charging too much or too little for the work and advice they offer.
We could say that it matters not as long as the client is happy. Is that always true actually?
Keeping the taxman at bay
One of the services that clients implicitly require from their accountant is to ensure that they remain fully compliant so as to reduce the prospect of being investigated by HMRC. I have heard anecdotal stories of accountants who assure new clients that HMRC will not be a problem because of the accountant’s positive reputation. This may have been the case many years ago when local tax offices knew local accountants. I don’t believe it has been that way for some time so why do some accountants suggest that nothing has changed?
It would be easy to side-track here into a discussion about how greedy clients have only themselves to blame if they ‘invest’ in fancy tax avoidance schemes that eventually unwind.
I think we all know however that there have long been plenty of scheme promoters who seek to exploit that greed by over-promising the likely effect of certain tax schemes. Some accountants who got caught up in such situations naively repeated these promises despite not fully understanding the risks, downsides and likely challenges that would ensue.
Some accountants may unintentionally and naively over-promise the possibility of a positive outcome from clients’ activities or from HMRC’s enquiries. However, I believe that few accountants would knowingly attempt to con their clients. Unless you know better…
- Accountant jailed for £365,000 tax fraud
- Accountant jailed for £10m Ponzi fraud
- City accountant conned his friends and co-workers
Mark Lee is consultant practice editor of AccountingWEB. He has created a seven step framework to help accountants who want to STAND OUT from the pack; he facilitates The Inner Circle group for accountants, mentors accountants, entertains as a conference speaker and is chairman of the Tax Advice Network of independent tax specialists who provide support to smaller practices.
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