Don’t overlook personal clients

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For most practitioners, there’s a natural tendency to focus on business clients first and to treat their personal affairs as an adjunct to the core service. John Stokdyk launches a new series of articles exploring the opportunities presented by individual clients.

In an increasingly competitive market for accountancy services, many practitioners are struggling to assert themselves as offering something different for business clients. As competitive forces drive down fees and margins on traditional compliance work, perhaps it’s time the profession recognised that individual clients are untapped resource.

Just as oil and gas companies need to dig a little deeper and apply new techniques to open up new revenue streams, if practitioners put more effort into prospecting in this sector, private clients represent a significant opportunity for growth.

The market for individual accountancy services is being driven and stimulated by things such as pensions reform, technology and the shift to an increasingly freelance economy. Each of these trends opens up new niches for practitioners. While it may take more effort to reach these clients with tailored services, technology can help the practitioner to achieve this goal. It can also automate existing elements of your service to help you manage a bigger portfolio.

This article is the first of three produced in association with Moneyhub to help accountants to grasp these opportunities. This first article will set the scene, with follow-up pieces scheduled on how to win and serve personal clients.

Business clients first

Until the advent of the Finance (No 2) Bill 2015 and its tax treatments for dividends, the tax system incentivised accountants to incorporate high-earning individual service providers and turn them into business clients.

Further inducements such as the Enterprise Investment Scheme also blur the picture by encouraging private investors to become business entrepreneurs. They won’t necessarily be the company directors in all cases, but their client profile and tax affairs will not differ much from owner-managers.

Business clients usually get their personal affairs bundled into their accounting service package. There are advantages such as reduced paperwork and faster turnarounds for the client and practitioner. After doing VAT returns, year-end accounts and dividend declarations, the business accountant will often have all the information they need to hand to complete the client’s personal tax return.

These kinds of client will often favour a quick update rather than long “getting to know you” conversations and hand-holding that may be needed to woo high net worth individuals into your practice.

Private clients may be less highly engaged with accounting and tax processes than business clients, according to David Crowter, tax director at the south coast firm Carpenter Box: “The focus of their life may not be about financial well being.”

As a result the individual client is not necessarily going to be as organised with their paperwork and may end up being among the laggards who still need to be chased for outstanding documents come January.

The personal touch

But the risks and frustrations of dealing with private individuals are not the whole story, according to Bryce Sanders, author of ‘Captivating the Wealthy Investor’ and a specialist trainer in acquiring high net worth clients. The longevity of the relationship is one of the big advantages of private client work.

“Businesses are more likely to shop around or ask for proposals. They review vendor relationships and are very good at beating the price down. An individual client is more likely to ‘set it and forget it’. They don’t think as much about shopping around.”

Sanders draws many of his insights from the financial services industry and points out that there is a natural progression from helping the client with their tax affairs to wealth management. “This is definitely an area that creates an opportunity for accounting practices,” he says.

“Accountants moving into the world of financial planning can help clients to build a financial roadmap by giving them general advice, or referring them to people who are registered to give financial advice.”

Practices can provide these services themselves, which comes with some hefty regulatory baggage. After the enactment of the retail distribution review (RDR) at the end of 2012, financial advisers have to be registered with the Financial Conduct Authority as financial intermediaries.

For accountants willing to fulfil the requirements, however, the RDR plays very well to the profession’s business model by doing away with commissions on products sold to retail consumers, and requiring advisers to provide independent advice for an agreed remuneration.

If a firm is not prepared to take on the costs and inconvenience of registration, it can still enter into referral partnerships with IFAs, or set up associated companies - which is the route Carpenter Box opted for when it created a sister wealth management firm.

Auto-enrolment is bringing a lot of new entrants into the pensions market and proving to be a stimulus for financial planning advice, according to Chris Reed, who works at Carpenter Box Wealth Management LLP.

“All gimmicks aside, auto enrolment is a real way to get people interested in pensions and saving. More people are saving and planning for retirement. And with all the recent pension changes there are so many tools available,” he says.

Retirement planning naturally leads on to estate planning and for more adventurous wealthy clients, trust arrangements.

What private clients expect

Winning and taking care of individual clients relies more heavily on personal care and attention. Rather than dealing with “transactional” clients who do a bit of business and then move on, the practitioner should look to build up their relationship by developing an intimate understanding of that client’s needs, motivations and preferences. Some detailed approaches will be explored in the next article in this series.

Personal care is still important, but building better relationships doesn’t need to be a labour intensive process.  Technology can help you have better relationships with people without physically spending more time.

Younger clients may prefer a more hands-off approach, where a technology solution (such as an app) provides the right value through information and insight. However, different approaches will suit different clients according to David Crowter. “You’re working with different personalities.” Older clients, for example, may need a more pastoral service with a lot of personal attention, he added. “And you need accountants who are good at this.”

Caroline Cole at Eastbourne-based Savoir Faire Accounting fits this description perfectly. She founded her firm specifically to deal with French clients living in the South East of England. “My dream client is a UK subsidiary of a French company, but I’ve found that I’ve picked up a lot of individual clients almost by accident.”

Her portfolio is expanding to include other international clients who often face similar complications to her French clients with issues like double taxation treaties.

“The complexities are interesting and have presented me with a niche to offer a premium service,” says Cole. “Yes, there’s a risk. But it’s all about managing risk - I’m on the helplines/phone lines constantly to confirm my thinking. If I’ve checked with my PI insurer, they’ll cover me.”

The level of care Cole provides is evident from a testimonial from a French client she submitted to accompany her Practice Excellence Award submission earlier this year (translated): “Caroline has supported us in this professional and family project. Her private advice concerning the choice of schools was useful.

“She checked each step of the journey and shared with us her professional network, solicitors and banks, some of whom also spoke French… The tools that she uses are at the forefront of modernity and allow precise and efficient work which never suffer from delays because Caroline is perfectly devoted to her clients, whatever the request. We give homage to her great availability, her efficiency, her professionalism and her kindness.”

Scaling services for private clients

As Caroline Cole at Savoir Faire Accounting confirms, there are challenges for dealing with individual clients, but there is also a huge portfolio of tools available to streamline the tasks involved in serving them. These include:

  • Social media and online content marketing - for developing new relationships with key communities and demonstrating your expertise and availability to the individuals you’d like to serve.
  • Customer relationship management software - for tracking prospects, categorising prospects and clients, targeting them with effective messages and tracking communications.
  • Tax and practice management systems - including secure online portals for collecting documents and tax information and confirming authorisations electronically.
  • Online accounting and financial management tools - Some individuals take an active interest in their personal finances and income streams and will have their own tools for doing so. But they may also be keen to take guidance from their accountant on better tools than the ubiquitous spreadsheet. New cloud tools are emerging at an incredible rate: explore the possibilities for creating personal finance dashboards and informing clients of important developments or alerting them that a deadline is nearing.

According to a CapGemini/RBC Wealth Management survey in 2014, 65% of high net worth individuals expect to manage their wealth relationships digitally in five years. Many of these individuals use the net to stay informed and trade shares and assets, but 61% in the survey said they still seek personal advice before deciding their strategies. As their potential accountant, are you in a position to meet those needs?

To find out more about what private clients need and techniques to deliver those services, download Moneyhub's Five-point plan to kick-start your private client portfolio

About John Stokdyk

John Stokdyk is the global editor of AccountingWEB UK and


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09th Jan 2016 17:41

Many years ago, in a land far away

In the early 1990s I recall an appraisal discussion I had with the then Head of Tax at accountancy firm Clark Whitehill. I told him I wanted to move away from personal tax work. I also had a lot of partnership clients and just two large corporates. I wanted to focus on corprate tax because I felt it was more profitable.

Ian reminded me that the firm had long been the auditors to a very large and well known corporate client. (I remembered having asked about this atypical client when I had a joined the firm a few years earlier. I had been told that the firm recognised that they wouldn't be able to retain such a large client for much longer - and indeed they didn't).

Ian asked me if I thought we had this enormous client because of our skills in auditing or corporate tax advice? He encouraged me to recognise that we had only retained the client because of the way we had looked after the family members who owned most of the shares (either directly or via trusts). In other wards it was the firm's approach to looking after private clients that had enabled them to retain this large and growing client for much longer than might otherwise have been the case.

For the rest of my career in tax I remained focused on private clients and partnership tax work. I never regretted it and always appreciated Ian's advice.


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09th Jan 2016 21:29

this is an extraordinary article
May I be so bold to suggest that personal / self employed clients are the bedrock of small practicioners client base

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11th Jan 2016 17:59

Surely it depends on what part of the market you address?

Thanks for the feedback, Carnmores. It's not often my articles are called "extraordinary"...

I am sorry if you feel I'm teaching you and other AccountingWEB members to suck eggs, but we thought the topic was worth exploring and the feedback I got from several practitioners was that there are differences between strictly personal and business clients.

A lot of the material I drew on came from the Practice Excellence Awards entrants. The predominant impression I got was that their focus was on helping ambitious owner-managers to grow their businesses (while supporting their personal financial needs). That's obviously because these people represent the most profitable client base for practitioners - although some of them did give us insights into the way they approached other high net worth individuals and private clients.

You mention the self employed client base, and that may well be your bedrock. But from the conversations I had and evidence I collected, a large portion of these people are converted into business clients by the creation of limited companies, where the primary focus (and source of fees) becomes the business accounts.

Of course this is a holistic service and good practitioners will have created that structure (I sincerely hope) because it best supports the client's aspirations and life goals.

If I have misrepresented elements of serving private clients, or have overlooked important features of providing that service, I would be very keen to hear what you have to say.

This is the first article in a series of three exporing this area. If I haven't hit the right mark with this piece, feedback from you and other members will help me improve the subsequent articles.

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11th Jan 2016 18:09

i look forward to 2 & 3

there's a starman waiting in the sky......

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