Many firms are already on the path to building a business advisory service, yet few have achieved their objectives and are facing a myriad of issues. In this article, we look at where future opportunities lie for advisory services and how to overcome the challenges barring the way to success.
Just to review, in part one of this series we discussed how accounting firms are looking to move away from reliance solely on traditional compliance by building advisory revenue.
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Effectively adopting advisory services across a firm will involve transformational leadership, tenacity, and a heavy investment in training, integration, technology, and people. The outcome for the brave will however be a diverse professional services firm that acts as a net, exploring, nurturing, and converting a wealth of opportunities from quality clients.
The journey for each organization (and, indeed, each individual partner) will be different. Each partner’s portfolio of fees and individual vision will drive a different blend of advisory services.
In a multipartner firm, this may be just 5 percent of overall revenue, while for others it will be 50 percent of what they do. There is no right or wrong mix; however, there needs to be an element of advisory services in almost all portfolios for a sustainable business model.
A key milestone on the path to building a successful advisory service will be to ensure partners are themselves competent in this area. Most people with good core values cannot sell a service they do not understand or in which they cannot demonstrate capability. On top of this, risk-averse clients buying through committees are no longer swayed by flashy marketing brochures and hype. They want authenticity.
Regardless of whether new business comes through a referral or marketing campaign, partners need the ability to convert new business by demonstrating great problem-solving skills, rather than simply pitching a service. To do this, they need to be fluent in the tools and processes to deliver advisory solutions.
This is why the time invested in boosting skills to cement capability and confidence needs to be directly linked to the blend of advisory for that portfolio of fees. Firms that invest more in continuous skill development will reap the rewards. There is no quick fix.
A key component of success is the ability of individuals to bring the right mindset to a client engagement. Clients want to have advice provided by somebody who generates terrific energy, thus having a good life balance, regular mental stimulation, and good family time is key to success.
Another challenge on the road to successfully building an advisory capability is the question of leverage. The nature of advisory services means it’s often difficult to utilize junior members of the team to boost capacity. After all, the owner of a $40 million turnover manufacturing business may not feel comfortable having their strategy challenged by a junior team member who has spent a few days of training learning how to deliver a strategic planning workshop.
Immediate gains can be made by “practicing what you preach,” encouraging teams to use a common set of tools and methodologies within the firm itself, to address margin issues, for example. This benefits not only the firm’s profitability, but also demonstrates capability to prospective clients.
Authenticity is a trait valued by clients when selecting a trusted advisor. A partner with a wealth of business acumen can quickly complement this knowledge with the skills required to facilitate advisory services (at high rates), then leverage specific projects to more junior team members.
As they grow in confidence, partner-led teams can then move into providing “basic” advisory support services, such as coaching support services and profit improvement workshops. Once capacity and competence has been created, the team will be able to spot opportunities for advisory by asking clients some simple questions: Where do you want to be in the future? What are your top three challenges? Imagine the advisory opportunities the team will spot if they all adopted this mindset and questioning.
Larger firms have the opportunity to build a dedicated business advisory support division run by a partner 100 percent focused on advisory. The team may include consultants, coaches, and potentially third-party specialists driving complicated change projects outside the competency of an individual partner’s team.
Educating the wider firm on the division’s skill set and how they complement the wider service model will be a key role. It may be, however, that some clients only utilize advisory services. Whilst there are challenges to success, not least of which are the questions of capacity and competency, a wealth of client opportunities await firms that have the quality leadership, skills, and tenacity to pursue them.
Look out for the next article in the series: “The Road to Building a Business Advisory Service, Part 3: How to Move Forward” for ideas as to how to proceed.