WHEN discussions on the future of the accounting industry are taking place, Mitten Clarke isn’t usually one to miss out, and we were recently invited to join in with a roundtable event at ICAEW’s research project ‘Tomorrow’s Practice.’
While we touched on a number of topics, one of the most prominent issues facing accountants was that of Alternative Business Structures (ABS), also known as multi-disciplinary practices (MDPs). Created to reduce the monopoly of lawyers and solicitors, they offer consumers an alternative place to seek advice.
If you’re an accountant looking to improve your client base and provide greater value to those currently on your books, becoming an ABS offers the chance to supply a diverse selection of services, including more legal based advice and support.
You might already be well placed to become an ABS, in which case, the changeover could be quick and easy, with your clients enjoying the benefits it brings in no time at all. Having all business-related services in one place can make sense, and you may already be offering a host of advice on business strategy, protecting assets and maximising profits, beyond the traditional remits of an accountant anyway.
Clients trust you to handle all their financial affairs, so why wouldn’t they turn to you for advice on other important matters too, like employment issues, property transactions and will writing? Face-to-face legal advice can go hand in hand with accountancy, and you are arguably well placed to offer this holistic advice to your clients.
Furthermore, becoming an ABS could help you raise more equity as you diversify your partnership base, and arguably spreads your business risk as you become less dependent on a single income stream. It offers you plenty of opportunities to cross sell services, and helps prevent clients from switching firms due to the associated cost and effort of unravelling everything.
It might even be just what your accountancy firm needs for a fresh start, a re-brand and a way to energise the whole team. It could also help you retain your most competent staff, if ABS firms are actively recruiting and targeting your young talent. Depending on the personality of your staff, they may see greater opportunities in moving to a larger ABS firm.
Spread too thinly
While ABSs might benefit some accountancy firms, others could be in danger of overstepping their capabilities. Without the right staff and resources, you might spread yourself too thinly. This could harm the reputation of the accountancy industry as a whole.
A number of accountants are already a ‘one-stop shop’ for help and advice, and their clients turn to them because they trust and value the advice they receive. At Mitten Clarke, we know when to refer our clients to specialists in their field. We can sleep at night knowing that our clients are getting the best advice, even if it means we have lost the opportunity to do a piece of work.
Other practices may not be so careful. They might jump at the chance to become an ABS and offer a wealth of advice they have no expertise in. The last thing we want as a profession is to promise our clients a service we’re unable to deliver on.
You might feel under pressure to try and diversify the services you offer in order to keep up with the competition. This may be a suitable option for large firms who have the finances available to recruit new staff, boost manpower and provide additional resources, but if you’re a smaller firm, training staff up to meet ABS requirements and offer new services will be expensive and is it really a realistic option?
The question is, would you rather be a ‘jack of all trades and master of none,’ or retain your status as being an expert accountant, highly skilled at what you’re good at? You could become highly dependent on key professionals in your firm, without the skill set to step into their shoes if they walked away.
Is ABS right for you?
If your new business comes largely from introducers, then of course this could dry up. Overnight you will become a competitor of those firms who referred work to you, and likewise the referrals from accountants would dry up for those who’ve decided to join you.
Are you thinking of selling your firm in the near future? Is so, then you may prefer to protect the capital value and saleability of it. Get too large and the pool of potential buyers becomes much smaller, and you might find it difficult to sell the business. Or, maybe you’d rather diversify and earn more profit in the short term? There’s no certainty as to which option will be the better one to take for the future.
As it stands right now, we’re happy to continue with the informal relationships and partnerships we have with other professional firms. It offers us greater flexibility, allows us to specialise in what we’re good at, and we feel our clients are getting the best of both worlds.
That said, we’re keeping an open mind.
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