Advice vs advisory: The practitioner's viewpoint

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Suppliers and consultants promote advisory services as the future of the profession, but what do practitioners think? Richard Sergeant finds out from accountants in practice whether it chimes with the services they offer.

The first article in this series, Nothing new under the sun, took a long view of the “compliance is dying, advisory is the future” message, and suggested that in balance making a distinction between what is advice (and its function) and what is an advisory service was a useful one to make.

In summary, mass regulatory change created by available technology should see the value of compliance increase, create new touch points with clients, and the possibility to talk through issues arising. Advice in these terms is compliance plus expertise and insight, whereas advisory services are discretionary purchases probably based around a project or defined program.

But, what do today’s practitioners feel about the advice/advisory piece, where it fits with services, and the value it delivers for clients and for them?

Do business owners see accountants as credible advisers?

Previously we looked at how advice is often the glue that helps hold the relationship over the long term and creates the ‘trusted adviser’ role.

It’s something that found support from AccountingWEB members like ireallyshouldknowthisbut: “Compliance is what clients are willing to pay for, but it’s advice they come to you for and why they stick around”.

However, when it comes to offering more than this, it would seem that some view it as only credible if it comes with specific experience.

As Glenn Martin, owner at Avery Martin, suggested: “It depends on your skill set, but it is only credible if you have also worked in industry, not just in practice. The breadth of your knowledge needs to extend to the impact on operational matters, and the whole infrastructure.”

Mark Telford, director at Telfords Chartered Accountants, also agreed. “Working only in practice can limit the experience you can draw on; those who have had time in industry (and commercial experience in particular) have an advantage”.

Meanwhile, Alan Woods, MD at Woods Squared, takes the view that accountants can be trained and supported to offer something more than just compliance-based advice. “Having a process and methodology, and building up the experience can be effective. In the background, there is a process but it may not be very visible,” he said.

However, there is a note of caution. “Productising advisory can be counterproductive, as the business owners can feel like they are being shoehorned into a process that may not be tailored enough,” Woods continued. “You end up trying to make them fit it, not it fit them.”

Martin raised similar concerns, especially in how some choose to position themselves in the market. “This trend of expecting clients to sign up to extra services or they can go elsewhere is a dangerous road to go down, as long as a job is priced correctly there is nothing wrong with a client just wanting compliance.”

Compliance services and the role of advice

For Robert Stell, owner of Bradbury Stell, there is little ambiguity between the services offered to clients and where advice fits in. “It’s the compliance we charge for, and everything else we give away for free. It’s what clients expect.”

An approach generally agreed with by Telford. “My whole idea of setting up the practice was to be in the gap where basic advice is offered as standard.

“A client may do all their own bookkeeping, but we do the VAT return - at which time we’ll have a quick look through their P&L and balance sheet, and if there are any areas we need to bring to their attention we will.”

And as Martin put it, “Good compliance-based services include advice - and most of it should be part of your engagement. This is your job. Compliance with more regular reporting isn't advisory, it is just providing numbers with guidance.”

This final point is worth highlighting, as it is perhaps one of the most keenly marketed versions of an advisory model, but one that Telford is keen to dismantle:

Producing regular management accounts including accruals, depreciation and so on  -  would be chargeable work, but this isn’t advisory, this is financial and management reporting.”

So, where does advisory fit in?

The crossover point

Although still very much open to interpretation, there does seem to be some consensus amongst those interviewed:

“During the work we do for owners, we uncover additional projects, with very specific aims, with work and input needed from both the business and us. These are often high value to the client and to us,” explained Woods.

And Telford builds on this. “Advisory is not necessarily a specific set of services but often a project. These projects can often involve deep questioning and analysis to uncover the underlying causes, as well as bottoming out where it is impacting the business. You have to be able to do this before mapping out a specific plan and actions.”

Of course, the adviser sphere itself is very broad, and we can see examples where coaching, mentoring and access to specific expertise forms a key part of the relationship as Glenn Martin explained:

“We do a lot of rapid growth stuff, so it’s about when to improve systems, when to recruit staff, how to raise finance and what type of finance would suit their circumstances, social media and marketing- some of which is delivered by our wider network of contacts - but on the whole very bespoke assignments”

Do accountants need to aim to be more like business advisers?

Whether or not accountants should be looking to sell and deliver advisory services seems to be a very personal decision:

“There are certainly ways in which you can grow into this role, with the confidence that the systems and processes to support come from in-house. But it will depend very much on each individual,” suggested Woods.

Martin reiterates the point about having the right experience for clients to buy into, but also that the profession has plenty of work on its hands for the foreseeable future.

“If you don’t have the background it will be tough, and there is still valuable work to be done as it stands.

“MTD filing four times a year should increase the value and amount of compliance work as owners will want to get things professionally done, they will look for advice but they may not actually need much else”.

Telford picked up on this point, and made the case that plenty can be done that has greater personal impact within the comfort zone of most. “We all want business owners to achieve their goals, and that covers a large range of things. But most clients just want a better view on day to day financial performance and not much else.

“I would suggest around 10% of clients in a typical practice will be open to advisory services - the rest don’t need it or won’t pay for it.”

In the final part of this series, we ask the suppliers and consultants to the marketplace to take another look at the factors influencing firms today, and ask if the “advisory practice” is a myth of their own making, or if there is something different going on this time.

About Richard Sergeant

Richard Sergeant

Specialist insight and business development support for accountants and their vendors. Cloud advocate with a pragmatist eye.

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11th May 2018 15:22

Great article Richard, well written and well balanced, I look forward to the conclusion of the trilogy.

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11th May 2018 18:00

Good article Richard.

I notice none of the respondents extolled the virtues of pretty graphs and endless pages of variance analysis and how it had helped them become an 'advisory practice'.

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to Kent accountant
11th May 2018 22:59

Hi, this is completely off topic and has nothing to do with the post what so ever and have basically used this blog as I’m struggling to navigate he site. I’m a self employed plasterer and I’ve just filed my self assessment with my accountant a little over to weeks ago. I’m just wondering if anybody could give me any answers as to why there is such a delay this year as my mate has been waiting since he 6th of April when he filed he’s and he’s still not received payment and I’m hoping mine does not drag out so long! Sorry for jumping on the blog! And thanks in advance for and answers! :)

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to Adamspeak211191
14th May 2018 11:12

Kermit

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15th May 2018 14:55

Adam call 03002003310 and ask them if they can send the refund. That will speed it up.

See there's some free advice straight to the point and gives a benefit and will solve it, just like what this websites talking about. Although why you didn't call your accountant who you paid to do it and ask him and have him do it...who knows.

Also have you considered becoming a limited company or partnership with our wife one of these 2 options may reduce your tax liability... because isn't 90% of what we do about helping keep taxes down.

Well unless you want to buy the company you are subcontracting to and we could do the due diligence and help you buy it. There's some nice advisory work we can offer.

There are three secrets to success
1. Be helpful to people
2. Don't tell everyone everything you know.

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