Transcript 12.10-12.45_paul_lothian_ - The Personal Finance Society

“Getting in to bed with Accountants”
Paul Lothian BA (Hons), FPFS, ACII, CFP
cm
Chartered Financial Planner
Director, Verus Wealth and A2+B Wealth
How to engage accountants formally and
maximise the value of the relationship . . .
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Why bother engaging with accountants?
Formalising the relationship
Maximising the impact and adding value
is a joint venture with:
is a joint venture with:
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Established 2005
50/50 ownership split
2 advisers plus 3 staff
85% recurring income
C 120 clients
AUA C£55M
Typical AUA per client = £200,000
35% of income attributable to client
referrals from JV partners
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Established 1933
Two offices (Dundee and Montrose)
5 partners
33 staff
Turnover C£1.6M
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Established 2011
40/60 ownership split
2 advisers plus 3 staff
35% recurring income
C 30 clients
AUA C£17M
Typical AUA per client = £400,000
95% of income attributable to client
referrals from JV partners
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Established 1992
13 partners
C150 staff
Turnover C£18M
Surrounding A2+B Wealth
Accounting
Services
Audit
VAT
Personal
Corporate
Tax
Finance
Wealth
Corporate
Payroll
Tax
EETS!
Outsourcing
Finance
Directly authorised
Appointed Representative
Why bother engaging with accountants?
• Unlike most solicitors, accountants see most of their clients on a regular
basis
• They are ideally placed to identify client needs/ planning opportunities
• They understand and appreciate the value of good financial planning and
investment management
• Their clients are used to paying fees for professional services
• Many accountants used to offer financial advice (pre-FSMA 2000) but no
longer can
• There is great deal of “crossover” between what accountants do for their
clients and what financial planners do for clients
• Joint consulting opportunities (especially in the corporate and Trustee
space, but also to provide “family office” services)
• Your knowledge and expertise WILL increase!/ CPD
Why bother engaging with accountants?
(continued)
• Joint seminar opportunities (eg Corporate tax compliance matters along with
Business Protection, Auto-enrolment etc)
• “Symbiosis” – planners and their clients will also benefit from having the
accountants’ expertise and services “close to hand”
• Accountants value the convenience of having financial planning experts close
to hand
• Referrals generally come with trust and respect already a “given”
• Increase your “professional standing” by association
• Be introduced to their professional connections as well as their clients
• Professional introducers who could have a financial incentive to actively refer
business, regardless of referrals being made in the opposite direction
“Our books are balanced. 50% of the
numbers are real and 50% are made up!”
Challenges
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The accountant “archetype”
Interactive
Exercise!
Thinking
Introvert
Extravert
Feeling
Introverted
Thinking
Extraverted
Thinking
Introverted
Feeling
Extraverted
Feeling
Introverted
Thinking
Extraverted
Thinking
Introverted
Feeling
Extraverted
Feeling
On a good day…
Cautious
Precise
Deliberate
Questioning
Formal
Caring
Encouraging
Sharing
Patient
Relaxed
Competitive
Demanding
Determined
Strong-willed
Purposeful
Sociable
Dynamic
Demonstrative
Enthusiastic
Persuasive
On a bad day…
Stuffy
Indecisive
Suspicious
Cold
Reserved
Docile
Bland
Plodding
Reliant
Stubborn
Aggressive
Controlling
Driving
Overbearing
Intolerant
Excitable
Frantic
Indiscreet
Flamboyant
Hasty
Challenges
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The accountant “archetype”
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Differences in “Corporate Culture”
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(some) CA’s perception/ pre-conception of IFA’s
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Accountant’s existing IFA connections
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Fees: ad-valorem not favoured by many CAs
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Generally reactive rather than proactive
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Partner buy-in/ support varies
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Can be “protective” of client bank
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Aligning with the CA’s practices/ staff policy etc
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Level and nature of CA firm’s involvement in strategy/ business
management
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“Fair and equitable” division of profits
Joint Venture Considerations
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Chartered Accountants and/or Solicitors?
• Preferably with no existing financial planning offering
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Firm size? – 5 partners : 1 planner
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Format:
• Introducer arrangement?
• New service offering (branding)?
• New company?
• On-site or off-site?
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FSA authorisation e.g. AR or direct?
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Incorporated or partnership/ LLP?
Accountancy
Partnership
IFA Ltd
Holding
Co.
(or LLP)
NEW
CO
Shareholders in IFA
AR of IFA or
directly authorised?
Joint Venture Considerations
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Chartered Accountants and/or Solicitors?
• Preferably with no existing financial planning offering
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Firm size? – 5 partners : 1 planner
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Format:
• Introducer arrangement?
• New service offering (branding)?
• New company?
• On-site or off-site?
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FSA authorisation e.g. AR or direct?
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Incorporated or partnership/ LLP?
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If on-site, rent/ management charge (what’s included?)
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Directors/ Board members?
Joint Venture Considerations continued
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Shareholding structure (eg “alphabet” shares)
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Equity participation
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Profit share formula/ mechanism
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Costs control
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Exit strategy/ mechanisms
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Valuation of shares on leaving (Good leaver/ bad leaver)
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Restrictive covenants. (Who owns the client relationship?)
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Capitalisation (eg equity and /or loans)
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Principal’s contract for services / contract of Employment
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Principal’s remuneration / flexibility
“Explain to me again why enjoying my life when I retire
is more important than enjoying life now.”
The Approach
“Dear Mr Accountant,
If I can show you a way that your firm could:
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Increase its revenue and profit
Build a valuable business with high levels of recurring income
Widen your firm’s service offering / add an extra dimension to your portfolio of services
Provide a service that is highly appreciated by individuals and companies
Increase your clients’ loyalty / “stickability”
Improve the visability / oversight of the quality of financial planning and investment
advice your clients are receiving
Provide opportunities for collaboration and joint marketing initiatives
Would you be interested?”
The proposal stage
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Make a business case (why should the accountants consider doing it? – “WIIFM?”)
Have a clearly articulated client service proposition
(including an investment “philosophy” and basis of fees/ charges)
Have letters of commendation/ client testimonials
Suggest that the key decision maker(s) becomes a “client”
Business plan
- What will the business do? (Purpose). What’s its “USP”?
- For whom? (Target markets)
- How?
- Projected P/L and cash-flow for 3 years
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Marketing plan (more detail on how the business plan will be achieved)
- Internal and external marketing strategies
The proposal stage
(some tips for dealing with “Cool Blue” energy)
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PATIENCE IS REQUIRED!
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DON’T APPEAR PUSHY
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PROVIDE DETAIL
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BE PREPARED/ ORGANISED
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BE PUNCTUAL
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DELIVER WHAT YOU PROMISE (ON TIME)
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KEEP IT FORMAL and “BUSINESS-LIKE”
Maximising the Impact and Adding Value
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Client seminars
Internal knowledge briefings
Client mailers/ e-mailers
Client segmentation/ information “mining”
Seek introductions to their professional contacts
The service should be part of their client “on-boarding” and review processes
CREATE ADVOCATES:
• Staff pension scheme, DIS, BUPA, Denplan etc
• Partners should be encouraged to become clients of the service (at discounted
rates!)
• Actively encourage clients to recommend you to others
COMMUNICATION IS KEY:
• Regular group meetings and “1-to-1s” with partners/ managers
• Regular and frequent client “touch points”
Hear it from the horse’s mouth!
“Financial advisers looking to have clients referred to them by
accountants should exhibit the highest professional standards and
all that that entails: technical knowledge and expertise, advancedlevel qualifications, discretion, integrity, fair and reasonable fees,
proper management of any conflicts of interest, professional
communications and an adequately-resourced service proposition.
They should ensure that they can deliver what they promise. In
essence, they must demonstrate that they are worthy of the trust of
other professionals and their clients.”
Michael Brown
Founding and Managing Partner
Anderson, Anderson & Brown LLP
Chartered Accountants
Questions?
[email protected]
THANKS FOR LISTENING!