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What Can Go Wrong Removing the Middleman

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Jul 19th 2018
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If many Americans can file their returns on a postcard, they aren’t going to pay an accountant to do it for them, essentially eliminating the middleman.

Your clients want to save money, who doesn’t? Often, the way one profession justifies its expense is to suggest how you can save money someplace else. Saving money often means buying direct, cutting out the middleman.

Put another way, they want the client to spend money to do business with them, while saving money in other areas, yet the middleman often adds value. What now?

Several activities can’t be done directly by the consumer. Patients can’t bypass doctors and do their own surgery. No one cuts their own hair. Let’s look at other professions:

1. Insurance agents. Everyone needs health insurance. You can buy many types of insurance online. Insurance is a complicated product. It’s difficult to compare side by side.

How they coped:  They need to understand your situation, then they will offer alternatives. A low cost policy may not give you the protection you need, but you won’t know until it’s too late.

How accountants relate: You can pay what they are asking for (the postcard return) or you can pay what you owe, which might be less. Taxes are complicated. Most people’s situations are unique.

2. Travel agents. You would assume the Internet made the profession obsolete. People use hotel and airfare aggregator websites to get the best price.

How they coped: According to the Census bureau, there are about 105,000 travel agents in the US. The industry largely moved upmarket into the luxury vacation segment.

How accountants relate: Some Americans don’t need an accountant to file their taxes. Accountants can focus on small business owners, people with a salary plus a consulting business and other more complicated scenarios.

3. Mechanics. Think of a task you can do yourself. Instructions are easily available online. The professionals who do it are considered a disreputable bunch. However most people go the professional route even though it’s expensive. The task? Getting your car repaired.

How they coped: Many mechanics build a relationship of trust with clients. It lasts generations. People might think mechanics are bad in general, but mine is great.

How accountants relate: Develop a personal relationship with clients. Let them know how you can help them in other areas.

4. Lawyers. Attorneys are known for being expensive. People can buy a kit to write their own wills. Many people will choose to go to a lawyer anyway.

How they coped: Some lawyers offer “packages” for doing a will. Although you can buy a generic kit from a store, often every situation is different.

How accountants relate: Pricing for basic services shouldn’t be a “black box.” Prospects should know what a filing or an ongoing relationship is likely to cost.

5. Real estate agents. If you are selling your home, it’s tempting to go the “For Sale by Owner” route. It’s hard for many people to understand how an agent adds value, how they earn their 6 percent commission.

How they coped: They excel on the marketing side. They embraced the Internet. They know comparables. They get a property looking its best. They confirm a buyer’s finances. They work to hold the deal together.

How accountants relate: Like realtors, you must articulate the value you bring when you first see the new client. A lot of what a realtor does involves finding the optimum price point and being there when things go wrong. Accountants do this too.

6. Financial advisors. You can trade online for next to nothing. Robo advisors do a lot of what the advisor/money manager combination does, but at lower costs. Why not bypass the advisor and deal direct?

How they coped:  Instead of fighting, many advisors embraced the new technology. By incorporating robo-advisors in a client’s portfolio, they free up time to help clients in more serious areas.

How accountants relate: You offer advisory services in addition to filing tax returns.  Clients likely need help in these areas. They either don’t know it or don’t see you in that role. Explain how you can help. 

7. Buying or selling a car. You might not like what the dealer is offering. It’s tempting to attempt to sell it on your own. You see plenty of “For Sale” signs in car windows as you drive around.

How they coped: Large, multi-state car dealerships appeared. They offered to buy your car even if you don’t buy one from them. They added multi point inspections and warranties.

How accountants relate: The client’s greatest fear is being audited. They filed their taxes and the government found a problem. You will appear on the client’s behalf, acting as an intermediary. It’s your version of aftermarket service. It comes with a price.

8. General contractors. “It’s just a small job. How tough could it be? I’m not hiring a general contractor. I’ll take on that job myself.” It sounds like a sensible way to save money.

How they coped: Construction projects are often tougher than they first appear. You need to coordinates the trades, so they are on site when needed. Sometimes you need to find a person who can solve a problem in a hurry.

How accountants relate: When filing taxes, if you do it yourself, there may be opportunities you may be missing. The client needs someone who can see the big picture and pull all the pieces together.

These examples only scratch the surface. People make the case for eliminating the middleman in online shopping, online dating, even IPOs and funerals.

Bottom line: The middleman is there for a reason. They are a face-to-face point of contact and bring value, so can you.

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