The Symptoms of failure

Self-diagnosis for your firm

O n the previous page, we’ve discussed

three core ways in which accountancy-
based IFA practices fail, but there are
more contributory causes.
The following checklist of ‘symptoms of failure’ is intended as a
broadly-based aid to self-assessment. If you are sufficiently
concerned about the current state of your in-house financial-serv-
ices provision, you should not regard this as a replacement for our
targeted consultancy service, which is run by Gill Cardy, one of the
UK’s leading fee-based financial planners.
Reasons why...
Try out the checklist. If you feel you that two or more symptoms
are present, it’s time to give us a call (on 02920 494495)!

Symptom Relevant?

Although you have your own in-house financial services proposition, one or more Partners are continuing
to outsource investment work to a third-party (IFA, stockbroker or discretionary fund manager).

The age profile of Partners, or their proximity to retirement has led to a kind of institutional neglect of
business-development activity in relation to your financial-services proposition.

When external economic conditions are used as an excuse for ignoring a need for a fundamental review
of services, and implementation of structural change.

There may be a documented business plan, but there’s no marketing plan to support it.

The accountancy arm has no systems or procedures in place to supply a regular stream of reasonably
qualified ‘leads’ to the financial services arm.

The number of specific financial-services-related marketing pieces (aimed at accountancy clients) drops
below four annually.

Accountancy-
Your financial services revenues have dropped below 10% of main practice turnover.

Failure’s not an option

based IFAs fail

As we stated in our opening piece, the ‘partnership’ between tax-planning and other accountancy services, and financial-
planning or wealth management, is that ‘sweet spot’ where everything comes together. There is no rational reason why
this combination of services cannot be made to deliver life-changing services to clients, and a significant flow of profit to
the main firm.
The very fact that an accountancy practice has an in-house investment proposition is a key differentiator which makes
your firm stand out from the competition, and genuine attempts to integrate tax-planning and financial planning produce
benefits that are out of all proportion to the effort entailed.
With accountants still the No. 1 trusted source for financial advice amongst clients, why on earth should this business
model be failing?

Unit 16, The Globe Centre, Brought to you by...

Wellfield Road, Cardiff CF24 3PE
Tel. 02920 494495 Fax. 02920 465341
Email. info@2020fs.co.uk
www.2020fs.co.uk

2020 Financial Services Ltd is authorised and regulated by the Financial Services Authority, Firm No. 197107
Running man logo used with permission from 2020 Innovation Group

Great Partnerships...
Dear Colleague.
I
t is perhaps symptomatic of one’s outlook on life,
whether one remembers the successful partnerships,
or the ones that end in disaster.
Hopefully, the fact that I tend to remember those partnerships
which led to positive outcomes is not merely a reflection of a kind of
mindless optimism, or a desire for a happy ending. The fact is that
some partnerships can be truly great, and therefore it’s worth
reflecting on some of the characteristics of what makes them great.
One of the truly great partnerships is the functional relationship
between professional accountancy services and financial services -
or to be more current and precise, financial planning.
Of course, one’s assessment of greatness depends entirely upon
the criteria one sets. In some circles, perhaps the easy generation of
additional revenues in order to ease financial pressures elsewhere
might be such a criterion. That objective seems in practice almost
inevitably to result in failure.
No, our assessment of functional and profitable business value
focuses entirely upon the points of overlap between the different
areas of business proposition. When it comes to an assessment of
traditional accountancy services, and a genuinely independent
financial services proposition, it impossible to understate the genius
of those areas of overlap.
Is it possible for an accountant to offer tax-planning advice,
without a consideration of pensions, SIPPs, ISAs, VCTs and other
vehicles? Clearly not. Is it possible for an IFA to handle a client’s
Will and/or estate planning without involving the accountant in
respect of IHT and business exit strategies? To avoid doing so would
be negligent! In fact in just about every area of established
accountancy services (try new business startups, strategic planning,
tax returns) you’d need to be in a coma in order to ignore the wealth
of financial-planning opportunities available.
So why do so few accountancy firms make a success of integrating
financial planning services into their main proposition? Or to put it
another way, why do so many simply pass valuable equity on to
unattached, external firms of IFAs?
At 2020 Financial Services, we’ve had plenty of years to observe in
some detail the kinds of key strategic mistakes which accountancy
firms make when it comes to this area. Mistakes which deprive
practitioners of valuable revenue streams, and consign clients to the
oblivion of moribund, ineffectual or opportunistic treatment out
there in adviser-land. Is it time for a better way? In this leaflet we
share some of the causes of failure, to help you move forwards.
Kevin Moss
where it’s all joined up
Cagney & Lacey, Batman & Robin,
Torville & Dean, Marks & Spencer,
Strawberries & Cream, Steak &
chips...
New Model Adviser, 22/02/2010
Feeling blue about financial services?
The key moments when it all falls apart
Flaw # 1 - Confusing discretionary and non-discretionary purchases
Historically, traditional accountancy services have not needed to market themselves all that much. A moderately competent
accountant could usually attract an acceptable flow of business simply by opening an office or placing a Yellow Pages advert. And the
reason is that, historically, clients came through the door because they recognised that they needed various types of accountancy
services.
Now, perhaps that is about to change, but in any case the important point is that you could never say the same about financial
planning. The number of clients who wake up on a Monday morning and say, “today I must plan my retirement strategy” is
restricted to a very small, select band of enthusiasts - who probably don’t need the services of an IFA.
Financial-planning services need to be designed and then marketed consistently over a prolonged period of time. Clients need to
be reminded time and time again, often by means of graphic case-studies and examples. Financial Services is the ultimate discre-
tionary purchase, and clients need to be motivated to buy these services - otherwise your financial planners will just sit there twid-
dling their thumbs.
In our experience, 90% of accountancy-IFA failures are due to the lack of proactive marketing.
Flaw # 2 - Chinese walls
The typical medium-sized accountancy practice consists of a number of departments. There’s one for tax-returns, one for accounts
prep, one for audit, perhaps one for business startups, one for strategic planning, one for VAT consultancy or other forms of tax-plan-
ning. Everybody works hard, sometimes too hard. Heads are down, focused on the workload. Nobody talks very much to anyone
outside of their department, and at the end of the day folk go home and collapse in front of The One Show and plan their holidays.
Logic would dictate that when one department uncovers a client need which can be satisfied by another department, then
someone picks up the phone and shares that information. This is not some kind of opportunistic form of ‘cross-selling’ where the
client is being exploited, but rather a joined-up approach to delivering services which actually meet client needs. In practice, we find
that the failing firm rarely displays logic here - absolutely vital areas of client need, the kinds of thing which in practice have the most
significant impact upon personal wealth, or one’s financial security, remain buried in the files of one particular department.
There are no easy solutions here, but surely something has to change. There needs to be a collaborative work-ethic, where the
client’s needs are at the forefront, not the old habits which were adopted primarily for personal comfort.
Flaw # 3 - An ‘old-model’ transactional view of financial services
For many accountants, recent developments in financial services legislation have passed them by. This is hardly surprising. To
judge from the activities of many large IFA firms, they appear not to have consulted the FSA Handbook in the recent past either.
Things have, however, very definitely changed. In ye olde tymes, the IFA might be summoned into the accountant’s office, and
instructed to help the client invest £X,000 in a Personal Pension, in order to mitigate an exposure to 40% tax. Sometimes, this might
be a beneficial approach, but on the whole it led the client to regard the IFA as a Mr. Fixit, who was pigeon-holed into a narrow range
of specific uses. In practice, this could never be a sustainable business model, and led to considerable frustrations of being type-cast
into a service model which only scraped the surface of the real potential.
And the ‘real potential’ for a medium-sized accountancy practice is vast. A client-base which is used to recurring fees, and recur-
ring services with recurring deadlines could so easily be encouraged to see financial-planning in a similar light. All it takes is a little
education, some ongoing promotional work, and some effort in terms of integration - and the holy grail is in sight. Planned, profit-
able activity instead of occasional, unpredictable ad-hoc work. Clients who are educated to expect to pay a retainer for their annual
reviews - leading to an improved cashflow position. Services which are focused on strengthening the client relationship - resulting in
a far lower-risk business profile, with a much diminished probability of complaints. Offering IFA services externally (so not just to the
main practice’s clients) can result in new business referrals to the accountancy firm, as indeed can the development of links with
local law firms. A ‘new model’, integrated financial planning service is a ‘win-win’ proposition on every level.
Continued overleaf...
we know what works