DHM: Relationships are Twofold
Another accounting firm powering ahead of the pack, DHM’s approach to business is relationship-centric. And relationships, for this firm, mean two things: internal team relationships, and external client relationships. These relationships are managed by the firm through their “touch point” system – they have a number of these touch points throughout the year, such as with their bookkeeping division, their financial planning division, and with their clients (A and B clients) twice a year (one for tax planning and one for finalising tax returns).
Client relationships: face to face interaction
The most important thing an accountant can do, according to DHM, is talk to their clients. Not just on email, not just on the phone, but real, face to face interaction. Though they’re not opposed to utilising modern technology, they warn that many accountants will try to hide behind technology like emails and phones, ignoring the value of real interaction with their clients. Technology is powerful for improving internal efficiencies, and can assist in communication, but it can’t replace true communication.
If their clients are making excuses or claiming to be too busy to meet, the firm sends a staff member to the client’s premises to talk to them and pick up the documents they’re too busy to send or deliver.
The question we posed to this decidedly interactive firm was why accountants still procrastinate seeing their clients when they know that doing so will generate more work for them. Aside from the well-known stereotype of accountants being naturally conservative and therefore too afraid to sit down face to face with a client, they probably think it costs more (in time “wasted”) as opposed to emailing and aren’t confident in their abilities to generate extra work from these exchanges. Many accountants would even consider what they will need to charge the client to visit them, and then worry about the client’s willingness to pay for this service – a dilemma solved by a fixed fee model (see Fixed Fee).
Focusing more on the cost of the interaction rather than the benefits that it could bring is a classic symptom of the traditional accountant’s unwillingness to “give away time” – but perhaps these accountants need to consider these interactions as investments in the future of their firm. Trust brings business, and trust comes just from remaining in contact with your clients.
Whether or not an accountant is shy by nature is not an issue, as this firm knows. Though it takes time, anyone can build the skills it takes to interact well with clients. The firm trains staff and is beginning to gradually hand down the responsibility of communicating with – traditionally, the partners have been focused on the relationship and pass on this responsibility to management (mainly for C and D client relationships), they’ve created a standard client spreadsheet that summarises their position and includes their meeting agenda, asset position, performance for the year, and how they’re tracking wealth-wise for retirement plans. Staff members use this spreadsheet to drive client conversations and inspire advice that they can offer.
Cloud and technology
The firm are using cloud technology but are yet to progress further with it. At the moment, it’s mainly for bookkeeping software, and where it suits the client, they’ll also transition them to the cloud. Though DHM claim that they need to do more work in the cloud sector, they are adamant about not relying on one cloud provider, instead wishing to remain technologically independent to be able to use whichever software a particular client wants to use. The firm has clients using JCuve, Xero, MYOB, Reckon One, and the options will only grow from here. To keep up with the myriad of software available in the industry, the firm has one bookkeeper specialise in each program so that not every staff member is trying to learn everything (and therefore mastering nothing).
The firm’s fixed fee approach to billing has eliminated the surprise of inflated post-job accounting bills for the client, as well as motivated the firm to improve their internal efficiencies.
After monthly subscriptions proved too complicated a model, the firm began billing the clients every time they had a “touch point” with them.
Though they have experienced a little fee resistance, their positive relationships with their clients has minimised this dilemma. Communicating the value of what you’re doing for the client by talking with them constantly also minimises this. DHM send a bookkeeper out to look at each of their client’s records and make sure their systems are all operating correctly, making it easier for the accountants and the clients. If you’ve got the relationship, pricing is less of an issue (to the client).
Budgeting their fees, the firm essentially adds a percentage onto last year’s fee, and then have staff members examine it and see if any extra entities have been added, if any special work has been done or if anything is different from the previous year that may affect the fee.
As their fixed fee model is driven by compliance, they still need timesheets to ensure there isn’t any extra work being done that they haven’t been informed about. At the same time, the timesheets come in handy for monitoring staff efficiencies. In this way, their fixed fee model has caused DHM to look at the work being done and make sure it’s being done as efficiently as possible, by the most suitable team members.
DHM notes that many accountants are undoubtedly worried that a fixed fee model will create overwrites that they won’t be able to charge out, which could indeed be the case if the accountant didn’t use the fixed fee as motivation to work more efficiently. However, the firm reminds that it’s “not rocket science” and the benefits of such a model clearly outweigh the potential risks (which really are just the accountant’s faults anyway).
The future and compliance vs. advisory
When asked about the future of compliance, the firm remarks (humorously but truthfully) that humans, as inherently “lazy” creatures, usually stick to one thing (in this case, their accountant) once trust has been built. Therefore, the stronger the relationship with the client, the less likely it is that they’ll begin searching online for the cheapest accounting option – provided, of course, that your fees aren’t entirely unreasonable. This gives the industry some hope for the digitised future (or rather, present).
However, the firm notes that accountants tend to have high opinions of themselves but unless they move to actually giving advice to clients and value-adding, they’re nothing but “glorified bookkeepers”.
How has DHM gone about cross-selling (adding a financial planning component onto their existing compliance work)? By building gradual relationships with clients and placing “wealth creation” at the top of their “7 Client Needs” checklists that essentially drivers their client conversations. But client relationships were not the only pivotal relationships in their value-adding ventures; forging strong connections with people within the firm (such as in their financial planning section) and with joint firms elsewhere in the country was the key to creating and selling value-added services.
Smart accountants won’t have to completely revolutionise their firms to survive – they’ll just tweak things, add a bit more value here, save a bit there, make an acquisition or two here, and build on their relationships a little more.
Commenting on their rural location, the firm explains that they acquire come clients switching from Adelaide CBD firms (and even suburban Melbourne firms) as a part of a growing trend (made feasible by technology) from urban to regional firms due to the lower fees of the latter firms (most likely as a result of lower rent and associated costs).
As a rural firm, it’s no harder or easier to have those paramount face-to-face interactions with clients. Accountants will always have excuses for their lack of physical interaction with clients, but DHM maintains this dreaded (and therefore often ignored) element of accounting is not as hard as many make it out to be.
However, the firm is quick to note that the likelihood of rural-based firms having more competition, claiming that it is easier to “hide” as a city-based firm (i.e. not be as progressive and relevant), hence why many city-based and suburban city firms are not actually as competitive as their rural counterparts (who are now their competitors).
Not a practice but a businses: internal relationships
Managing their internal relationships has been critical to the firm’s decision (and one shared by all of the high performing firms profiled in this year’s GBU) to run their accounting practice as a business. The firm has monthly meetings with their executive board, and their larger quarterly meetings are chaired by an external chairman who keeps them accountable and provides them with external industry insight.
One question always raised at these quarterly meetings is who the firm’s next partners will be. The most important criteria for potential partners? Aligned values and an amiable personality. Grooming particular staff for partnership is a continual focus of the partners, who would rather “grow their own staff” than source them from elsewhere. Whether you’re going into business together or choosing upcoming partners from within your firm, DHM insists that finding people who are aligned with you is the most important consideration.
With a host of younger employees, the partners realised that they needed to be more like them to keep them engaged and motivated to move up the ladder. To assist with this, the firm takes key team members on an annual retreat, and has also invented a rewards program (much like a football or cricket club) where the winner of the “Best and Fairest” is rewarded.
DHM maintains that partners must constantly be thinking about succession planning and how they will individually get value from the firm when they do eventually leave. You don’t want your firm to just dissolve, so you must be strategic in selecting and grooming the younger members of your firm who you plan to take over from you, explains DHM.
Always evolving and unafraid of change, DHM is a prime example of a firm ready for whatever the future throws their way.