By Michael Carter, Practice Paradox.
I don’t know about you, but I’m tired of all this talk by accountants —and it’s been going on for decades now—about ‘being proactive’.
Lots of talk, but not a lot of walk.
How many accounting firms are truly walking their talk and actually being proactive with their clients?
Not many. Let’s look at the stats.
In last year’s Good Bad Ugly benchmarking data, approximately 9 out of 10 firms stated they wanted to do more non-compliance, value-add advisory work with their clients. But the data revealed that only one in ten firms achieved this to any meaningful degree.
Nine wanted to. One did.
That’s why we term this phenomenon The Value-Add Chasm. And note that we’ve defined it as a chasm, not a canyon. It’s not wide, and can be readily bridged once you’re shown how.
But it is deep, and most firms are either too scared to even try and cross it, or hurtle down in the attempt.
So they give up. Get busy. Retreat to the familiarity of compliance deadlines.
Back into reactive mode.
That’s why nine out of ten accounting firms are still on the compliance side of the chasm, doing what they’ve always done—providing mainly tax and compliance-related services—and watching their margins erode as their traditional business model loses relevance in the modern era.
On the other side of the chasm are the one in ten accounting firms doing significant amounts of non-compliance, value-add advisory work with their clients. They enjoy what they’re doing, and their clients appreciate the advice.
It’s refreshing, and a much better place to be.
So why aren’t more firms crossing the Value-Add Chasm? This year’s Good Bad Ugly data in this area is the same as last year, with the average percentage of revenue coming from non-compliance, value-add advisory services at only 13.3%.
Did that ‘10 want to, 1 does’ statistic hit you right between the eyes? It should have, because it encapsulates the number one skill gap holding back the growth, development and value of the accounting profession. It’s a massive gulf between intention and results, and shows a complete lack of competence in a crucial area. If these people were surgeons or pilots instead of accountants, there would be carnage on a massive scale.
Yet accountants’ lack of competency in this area keeps slipping by unnoticed, year after year. Nobody dies, and clients don’t berate their accountants for not ‘being proactive’.
Instead they just leave.
In a 2014 U.S. survey of small business owners, The Sleeter Group found the number one reason business clients switched accountants was, “Did not give proactive advice—only reactive”.
No proactivity without clarity
What irks me the most about the “be proactive” objective is that it’s always been fuzzy at best. Most accountants aren’t even clear on what it is. Even the coaches who bang on about being proactive on the profession sprout vague motherhood statements that feel good but mean little.
And because the advice isn’t specific, it’s not actionable.
At PARADOX we’re posing more pointed questions to the accounting profession:
- What does proactivity look like? Specifically?
- How do you measure it? How do you monitor it?
- What are the lead indicators that create the end result?
- What skills are needed to effectively execute the process?
And we’re answering those questions.
In recent blog posts (The Proactivity Paradox and The Active Ingredient) we drill down to the meaningful, specific, actionable advice you need as an accountant and business advisor to define and achieve proactivity.
As you’ll discover when you read those posts, unless your firm is measuring and monitoring both the Key Performance Indicators we call Clientshare and the number of Future-Focused Advisory Meetings (FAMs) it conducts each week, it will never cross the Value-Add Chasm. You can keep talking about being proactive all you like, but unless you move these measures, you’ll never be proactive.
The Proactivity Wish List
Let’s look at some tangible examples from this year’s Good Bad Ugly survey about which non-compliance, value-add advisory services firms want to give their clients more often:
In response to the question, “If you could successfully market and sell more of one particular future-focused, non-compliance advisory service, what would that be?” the most common responses included:
- Business advisory services generally, plus specific examples including:
- Board of Advice Meetings
- External/Virtual CFO, Management Accounting
- Bookkeeping with Financial Management Reporting
- Business budgeting with Actual vs Budget accountability
- Cash Flow Budgeting and Cash Flow Management Advice
- KPI Monitoring Service
- Business Planning/Strategic planning
- Business Valuations
- Business Succession Planning
- Financial Planning, Investment Advice, Wealth Management including
- Estate Planning
- Retirement Planning
- Self Managed Super Fund setup and advice
What a list! And there’s some potentially great value there for the firms’ clients.
You could categorise these services broadly under two headings:
1. Business Advisory
2. Wealth Advisory
These are clearly brilliant services to provide for clients. All are future-focused and designed to help improve clients’ business and financial lives.
A noble pursuit, to be sure. These services are why we’re so passionate at PARADOX about the potential the accounting profession has for effecting positive change in society. We’re helping progressive-minded firms fulfil that potential.
But at this stage, it’s still only potential for most accounting firms because these services are largely aspirational statements. Yes, these services are often listed on firms’ websites. But how often do these services actually get delivered? According to the benchmarking data, not very often. Those firms on the compliance side of the chasm simply haven’t learnt how to market, sell and deliver these services in a scalable way.
The Market > Sell > Deliver process
Three links in the chain that are necessary competencies for crossing the Value-Add Chasm are:
1. MARKET these services to generate the demand and enquires
2. SELL these service to convert the enquiries into formal engagements
3. DELIVER these services in a scalable way so they are profitable
I call them links in a chain because if any one of them is missing or weak, the chain—the process—breaks.
There’s a dirty four-letter word in there, I know: ‘SELL.’
Apologies for language some might find offensive. But I’m only being partly tongue-in-cheek with that comment. We know from our own surveys of many hundreds of accountants internationally that accountants have an issue with that word, and the whole idea of selling. There’s a perceived stigma accountants don’t want to be associated with. Some of the common beliefs accountants have about selling include:
- If a client wants something, they’ll ask for it.
- Our clients don’t want all that extra stuff.
- Nobody likes to be sold to.
- Selling is pushy.
- We don’t sell anything, to anybody. (Said with a tone of professional pride.)
These are limiting beliefs common in firms stuck on the compliance side of the Value-Add Chasm.
But guess what? The cold hard commercial reality is that—in relation to your future-focused, non-compliance, value-add services—you never get to deliver what you never learn to sell.
In my view, this is the most concerning and limiting skill gap in the accounting profession. The irony is, it’s the number one skill that helps an accountant or advisor cross the Value-Add Chasm. Unfortunately, most accountants have never been formally trained in this skill, and many actively avoid it.
We call this The Skills Paradox: The very skill that will help accountants cross the Value-Add Chasm, improve their business and provide far more value to their clients, is the one skill they’re commonly untrained in and avoid learning.
Ironic, isn’t it? (As you’ll see on our blog, we write about a number of paradoxes we see affecting the accounting profession.)
Dr Greg Timbrell summed it up perfectly in a response to our LinkedIn post, Why The Best Technicians Don’t Win In Accounting (Or In Life):
“Plenty of consultants can ‘do’ the job
but a great deal fewer can ‘get’ the job.”
That nails it. That’s why your technical advisory skills matter little if you don’t learn how to effectively sell them. And upstream from selling them is generating the demand and interest from your clients. That’s why marketing is crucial for any firm that wants to cross the Value-Add Chasm and provide more advisory services.
The way we teach firms marketing is to treat it as a client education. Clients value it, and it shifts their thinking to a point where they understand the need for various future-focused services.
By the way, if the word ‘selling’ doesn’t sit comfortably with you, think of it as the ability to communicate value. That’s all it is.
There’s an art and a science to it. In fact, it’s essentially a subset of psychology. It’s about what makes people say ‘Yes’ or ‘No’ to suggestions. And once you start learning in this area, it’s absolutely fascinating to find out what makes us humans tick.
Sure there are natural aptitude aspects about selling, but any person can learn how to better communicate value.
And I sincerely hope you do. Because even though accountants are technically capable of delivering value, only one in ten is currently competent in communicating value.
That’s the key differentiating skill for crossing the Value-Add Chasm.
But how many accounting firms treat selling skills seriously in their training and professional development? According to this year’s Good Bad Ugly study, only 18.1% of firms provide training to their staff in ‘selling skills’.
That’s fewer than one in five. And with only one in ten firms crossing the Value-Add Chasm, it’s safe to assume that 50% of sales training and advice in this area is ineffective.
We see a lot of superficial ‘silver bullet’ advice being dished out to firms in the area of professional selling skills and processes. A checklist or Fact Find questionnaire doesn’t provide the skill, nor does a piece of software. These are simply tools.
What’s more important than the latest software, tool or template is:
- Beliefs: First shifting your (and your advisory team members’) limiting beliefs around selling
- Process: Ensuring the firm has a structured sales process for stepping prospective new clients through, and for advising existing clients
- Skills: Soft-skills training is important, but don’t start there. The training will fall on deaf ears if the little voice inside the advisor’s head is chirping away with, “Why are we being trained in this? Surely, if a client wants something, they’ll ask for it. I can’t wait to get back to my desk.”
The accounting profession is approaching a crossroads. Firms know they need to “be proactive” and build advisory services on top of compliance services. But as we keep seeing in the benchmarking data, most are failing to achieve this goal.
We want to give the leaders and advisors within accounting firms the clarity, processes and skills they need to finally learn how to communicate the enormous (and literally life-changing) advisory skills they’ve developed.
It’s time for firms to step up and learn how to cross the Value-Add Chasm. The footbridge is right there in front of you.
Cross it. Your clients are waiting.
Check out Practice Paradox here.