Smaller accounting firms with 10 partners or fewer are under pressure. Competition is intense and clients are increasingly cost conscious. They are consequently working very hard to keep their revenues from slipping. One viable option for many of them is to incorporate wealth management into their practices.
Because of their size, the preferred approach is to align with a high-quality wealth management firm. When well conceptualized and implemented, it is very possible to build a wealth management practice that increases average per partner revenue by 20% to 40% within 18 months. The complication—and the reason these results are not very common—is that most smaller accounting firms aligning with wealth management firms fail to effectively leverage the clientele of the accounting firm; focus most of their efforts on promoting investment management and other financial products; and do not effectively frame their combined capabilities.
What produces the substantial increase average per partner revenue is …
Being client and process driven: The key to success is to focus solidly on clients and prospects. The best results are when the firms are reaching out and framing their expertise in ways that resonate with clients and prospects. For example, concentrating on income-tax planning proves to be very effective.
At the same time, the ability to develop a deeper understanding of an accounting firm’s clients leads to new wealth management opportunities. While most accountants are knowledgeable about their client’s businesses and personal taxes, they may lack insights into motivations, family concerns and the like. Using a tool like the Whole Client Model is a powerful way to fill in the blanks and determine what wealth management solutions are appropriate.
Distributing high-quality thought leadership content: In a national survey of 394 accountants, about 90% said becoming a thought leader is very useful for business development. However, only about three out of five of them were actively working to become thought leaders. Moreover, those who were being proactive were predominantly part of larger accounting firms.
By having the accounting firm systematically distribute thought leadership content tied to wealth management to clients, prospects and professionals such as trusts and estates lawyers, there is a tremendous probability that more business will ensue. To produce significant results using thought leadership content requires consistency. Material needs to be sent out regularly with follow-up.
The opportunity for wealth managers: A large percentage of smaller accounting firms are considering or incorporating wealth management into their practices. Relatively few of them are getting meaningful results. Even among those firms doing well, they are rarely anywhere near their potential.
Wealth management firms, which are able to deliver the expertise and the experience desired by clients, plus the methodologies to drive business, are the ones that will excel. These firms are bringing tools like the Whole Client Model and are providing the thought leadership content to be used by the accounting firm. The outcome is considerably more business for both firms.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.
