It’s one thing to talk to accountants about how they need to be more consultative in their work, but all the technology and best practice advice in the world will not have an impact until they change their clients’ thinking.
Accountants have access to more tools and learning today about how to become a better advisor and more of the service provider their business clients truly need today. However, when businesses are stuck in a “poverty mindset” that prevents them from evolving or even keeping pace with their competition, it can lead to failure. It is this very thinking that professional bookkeeper and advisor Ingrid Edstrom hopes to help teach other accounting professionals about, so they can truly assist their small business clients.
She will be speaking on this topic at the upcoming Accountex event in Boston in September and we recently spoke to her about where a poverty mindset comes from and what CPAs and bookkeepers can do about it.
AW: So what exactly is a ‘poverty mindset?’
Edstrom: This refers to limiting beliefs about money and business and business relationships. This gives accountants the opportunity to reframe discussions for clients. We may want to offer advisory services, but when clients are stuck in their beliefs about money and business in general it may be difficult to move them in that direction.
It’s important for us to discuss the beliefs about money. I’m in rural Oregon and some beliefs around here are around a lot of anger against establishment and capitalism in general, but those beliefs come out in their behaviors with money. If it’s so bad is it any wonder you don’t have any and your business is failing? Accountants can help clients get past their beliefs, reconcile books and still adhere to core values.
AW: What can an accountant do to help change the mindset?
Edstrom: It clearly doesn’t happen overnight, so there is patience required. The number one fear among accountants is fear of being called a fake. Someone saying you don’t know how to advise, when that’s the way the profession is going.
When an accountant wants to get into [advisory work], the main thing is to just start doing it. We need to get practice somewhere and relate on a human level. If you step into it with the fear that we don’t know what we’re talking about it won’t go anywhere.
We don’t have to have all the answers, but if we start to have these discussions with clients it will make it easier to implement those ideas in your own practice too. Speak to colleagues in the profession.
We are getting paid to lead the conversation as accounting professionals and clients look to us to lead the conversation, but they will rarely ask or make the first move so we need to get it started. As accounting professionals, we talk about money and we need to get comfortable with that. Ask clients how they feel about their current financials. Ask them where they want to be? You can’t always change someone’s mind but you can show them options and paths for them to make core changes to their benefit.
AW: How do you recognize when a client has these ‘poverty mindset’ issues?
Edstrom: There are several main symptoms, most of which accountants are very familiar with. One big one is their thinking that profit is evil. Maybe they didn’t have enough or had plenty and they either didn’t talk about it or if they do it’s seen as a bad thing. There are small business owners who have guilt over it.
Then there’s when a business owner hires someone and they are getting paid more than they are because the business owner doesn’t set aside money for their own pay and there’s resentment. When they do realize they can receive something they hide it, or feel they need to. This is the self-sacrifice symptom.
Then there’s clients who feel competition, some really value the idea of competition but really it’s a limitation; it’s a belief where we need to get our share and there’s only so much to share. In accounting we can focus on industry niches and offer core services, we make it so each of us can focus on deeper relationships with fewer clients rather than more and more or that we’re taking business away other accountants.