In the accounting and professional services space, practitioners are becoming increasingly entrepreneurial.
The term entrepreneurial describes the ability to see opportunities that others miss and the courage to take calculated risks to push an organisation forward. Entrepreneurs are innovative because they aren’t limited by conventional thinking.
As such, many accounting and professional services firms are not just about record keeping, transactions and tax returns anymore. They have expanded into areas like business advisory services for small-to-medium enterprises including financial analysis, government grant applications, and mergers & acquisitions.
This shift from repetitive, low value compliance-orientated tasks to higher value, strategic tax and business advice has come about because many professionals are listening and responding to changing client needs.
This ‘above and beyond’ mindset can be seen in the accounting profession’s response to COVID-19. Since the pandemic’s onset, accountants have worked tirelessly to help desperate clients understand their financial position, access government measures and pivot their businesses, all the while providing comfort, reassurance and emotional support.
As a result, the accounting profession is experiencing a renaissance.
Similarly, financial advisers need to adopt this market-driven, client-led approach.
Advisers have been conditioned to operate inside boundaries set by the industry and their Australian Financial Services Licensee (AFSL). Few stray beyond life insurance, superannuation and traditional investments.
They are missing opportunities to add value in related areas such as buying and selling property, estate planning and philanthropy, and business advisory.
But the idea of advisers swimming outside the flags makes some AFSLs very uncomfortable.
Under the AFSL regime, consumers benefit from higher consumer protections than many other sectors because licensees carry significant risk and responsibility. This, and the industry’s history of institutional ownership, explain why some licensees do not want advisers going off piste to meet all sorts of client demands.
The institutions wanted advisers to sell their life insurance, superannuation and investment solutions. By owning the value chain, they were able to get away with giving little consideration to the needs of their customers when developing new products and services.
However, in other industries and professions, the customer is king. Companies strive to understand their customers’ needs and preferences faster and better than the competition in order to deliver the right products and services.
They do so with appropriate risk controls and the necessary regulatory approvals but they let the customer dictate their business model because they understand that solving their customers’ problems is good for business.
Consider the food and beverage sector, which caters to all tastes and preferences including diet, no sugar, low calorie, gluten-free, vegan and, this summer’s latest trend, non-alcoholic beer and spirits.
Wearing my hat as Chair of 4 Pines Brewing Company, the group offers eight core beers plus a number of limited release options (approximately 80 annually in fact). Over the past ten years, it has launched and discontinued multiple product lines, reflecting changing consumer tastes. (The group’s non-beer brand, Brookvale Union, is now bigger than 4Pines itself.)
In 2017, 4 Pines became a Certified B Corporation as part of its commitment to pursue sustainable practices and be a responsible global corporate citizen.
Yet the advice proposition has barely changed in decades, despite the increasing complexities of life and work, rising levels of household wealth and debt, and heightened global economic uncertainty.
There is no question that advice on life insurance, superannuation and investments is the unshakable foundation of financial planning but what else is being built on this foundation?
In accounting, bookkeeping and tax returns are the springboard to offer higher value professional services. At top firms, tax and compliance are merely hygiene factors. Partners don’t lead with compliance. It’s a given.
Unlike advisers, accountants don’t operate under the AFSL regime. They don’t need to consult their licensee for permissions. Another advantage is that they did not start life as product agents.
The accounting experience demonstrates what advisers can achieve if they start thinking and acting like entrepreneurs not dealer representatives. In order to build stronger businesses, advisers need to be customer-obsessed and venture beyond the flags from time-to-time.
The flags at the beach aim to protect the public from dangerous rips but they are also designed to keep the masses confined to a small area so lifeguards can effectively patrol. The same parameters apply to everyone from infants to Ian Thorpe.
But the flags don’t exist for the likes of Ian Thorpe because the probability of them drowning is extremely low. Similarly, professional advisers should use their training, experience and judgement to confidently go about meeting the changing needs of their clients. They should gain any relevant licenses to do so.
As entrepreneurs, advisers should be constantly looking to add value beyond the status quo. If they don’t have the capability and capacity to do so, they should attain it organically or through M&A. While compliance and governance is critically important, entrepreneurs prioritise their clients’ needs and find a way to make stuff happen.