What is the business advisory gap and how can professional service providers close it?
During my 14 years at Chartered Accountants Australia & New Zealand I had the privilege of connecting with thousands of sole and small-firm accounting practitioners.
The calibre of individuals, the quality of their service and commitment to their clients was impressive. Over the years, what became apparent was the widening gap between those practitioners who solely focused on compliance-based work and those who were focusing their service offering towards meaningful business advisory services.
The advisory gap that is widening in the market is no longer whether firms offer advisory services, but rather how well they articulate value, what are they actually delivering and how do they communicate this to their clients.
Over the past few decades there has been the ‘slow burn’ emergence of business advisory services as a specialisation in the accounting arena. Business advisory services are distinct from “financial planning advice”, which sits within multiple regulatory frameworks. Indeed, CPA Australia actually found that up to a third of accountants are looking to abandon holistic financial advice services in the face of increasing regulatory cost and burden.
With the increased compliance costs and accessibility of high quality accounting software, the market has almost reached a tipping point for many in small or sole accounting practices. Compliance (BAS and tax) work, traditionally the bread and butter work of smaller, regional and suburban accounting practices, is no longer the value-driver for firms it once was.
Now more than ever is the time for accounting practitioners to come into their own in this business advisory space. We know from SMEs that their most trusted Advisors are their accountants. Accountants are often in the unique position of having insights across a range of businesses, their operating environments and industry drivers.
Who better than accountants to advise owners on the options for their business, to have the wider, strategic conversations with them and to guide them into connections with external experts who in turn can support the growth of their business?
The advisory gap that is widening in the market is no longer whether firms offer advisory services, but rather how well can they articulate the value, what are they actually delivering and how do they communicate this to their clients.
Business Advisory – Hindsight Analysis vs Foresight Exploration
Accounting is not a science, it is a humanity – essentially people-focused and about doing what is right for the client – something accountants are ethically bound to do.
Where value is lost is when businesses (and their accountants) often feel like they are having “rear-view mirror” conversations. Valuable time is invested in hind-sight conversations where the hope is that this can inform the business owner to make stronger decisions and take positive action in the future.
Business advisory services can create maximum impact when there is a dedicated focus on fore-sight conversations. Where accountants leverage the depth and breadth of their experience to facilitate robust thinking and critical analysis about the future of the business.
Some practitioners feel under prepared to have advisory conversations with their client, uncomfortable somehow about ‘up-selling’ their services or transitioning their own skills beyond compliance.
Through my many interactions over the years with accounting practitioners, I have seen that accountants operate well in structured conversations and environments.
But how do you structure foresight? How do you structure future-focused business advisory conversations? What are the principles that help to create a strong foundation while still allowing for a high degree of flexibility to contextualise the discussion to suit both the client needs and the practitioners’ skills and service offering?
I have seen a good number of practitioners do this part well and develop very strong practice models based on this sort of highly valued advice. Others are still struggling with the concept.
Best Practice in Advisor Engagement
I have always valued the ethical framework that quality accounting professionals apply to their practice. Accountants are often the primary trusted advisors for their clients.
The shift towards business advisory services is a positive move in the market – for both accountants and their clients. It allows accountants and their clients to work collaboratively to elevate the discussions above the day to day operations to focus on the strategic priorities and value drivers for the business.
Understanding and applying best practice in advisor engagement can support more accounting professionals to confidently close the advisory gap and add new value and impact to their clients.
The ABF101 Advisory Board Best Practice Framework™ is a foundation resource to provide structure to this advisory work in sensible, commercial terms, where the advice is valued appropriately, and risk is managed sensibly.
ABF101 Advisory Board Best Practice Framework™
Whether practitioners choose to provide their business advisory services as a 1:1 strategic advice or as part of a formalised advisory board, the ABF101 Advisory Board Best Practice Framework™ is a go-to resource created to provide support and guidance to those who wish to leverage the power and value of advisor engagement to achieve their strategic goals.
Underpinned by data, analysis and consultation, the ABF101 Framework outlines 5 key principles for Advisors and Organisations to consider when it comes to setting the foundations to establishing a strong, strategic and valuable Advisory Board.
Distinct from a regulatory standard, the ABF101 Advisory Board Best Practice Framework™ has been created as a principles-based guide only. This means it serves as a recommended approach and should be seen as a reference point to spark important conversations, instead of a must-follow step-by-step process.
Every business has its own unique goals, and will require a dynamic approach to Advisor engagement.
The ABF101 Framework is designed to be flexible and capable of adaptation to different organisations and situations to equip those wishing to form a high performing Advisory Board with:
- An accessible, easily-adaptable best practice framework to work from;
- Approaches and clarity in “how” to identify scope to ensure focus;
- Formats on setting up an independent, diverse Advisory Board that will meet the needs and purpose of a business or organisation;
- Key disciplines needed to foster a highly engaging problem solving forum; and
- Effective ongoing methods to measure success (or identify areas in need of improvement).
I encourage all practitioners seeking to deliver or enhance their current business advisory services to download the ABF101 Advisory Board Best Practice Framework™ and consider how they may utilise it as a foundation to meaningful business advisory conversations with their clients.
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