Learn How a True Trusted Business Advisor Adds Value

Learn How a True Trusted Business Advisor Adds Value

There’s a lot of buzz in the profession about advisory services; everyone is talking about IT, but what is IT exactly?

Ask an accountant if they’re a trusted business advisor and they’ll say yes – I know because I’ve asked hundreds of them. Ask them to describe a specific service offering that serves to define them as a trusted business advisor and you’ll get a vague answer or blank stare. At the same time, when you ask accountants to describe what it means to be a tax preparer or auditor, they’ll give you a detailed description of the service; how it’s performed, technical skill set required, what the client experience will be and the clear benefits associated with each.

For most, being a trusted business advisor ends up looking more like Random Acts of Consulting; those one-off, design on-the-fly projects offered up in response to random client needs. There’s an irony in this … because I don’t know any firms that perform random acts of audit or tax and yet the vast majority of firms have limited, if any, formalized protocol for delivering advisory services; what many consider to be the highest value work they do.

If you are serious about adding advisory work to your menu of services, random acts and loose definitions won’t get you very far. The path from trusted accounting technician to trusted business advisor is a value-adding journey:

A true trusted business advisor adds value by:

Moving up the value chain from delivering Hindsight,
To providing technology-enabled, real-time Oversight,
So they can deliver value added Insight,
As well as, mission critical Foresight.

Let’s look at each value-adding step:

  1. Hindsight is the act of reporting on past outcomes. As the saying goes, hindsight is 20/20. It’s difficult to add value at this level. It’s also very difficult to compete with other firms.
  2. Oversight: is the business of reviewing your client’s financial information with an eye toward addressing issues before they become problems. Operating in the cloud will soon be ubiquitous and an assumed competency. However, those firms that utilize cloud and mobile technology, not just as an information transfer utility, but as a means of getting closer to their clients, to keep an eye on day-to-day outcomes, these firms are starting to move into the realm of trusted business advisor.
  3. Insight: is the art of helping clients fully comprehend the implications of what appears on their financial statements. We refer to this as Financial Fluency in support of growing our clients’ business acumen. Tell them what’s happening in their business and you’re a good accountant. Teach them to understand and strategically respond to what’s happening and you become an essential partner in their success.
  4. Foresight is the science of breaking down company goals and strategies into key performance indicators. The operative word being “indicator.” Trusted Business Advisors are focused on improving the quality of information for decision makers. They do this by identifying the 20% of activities that are driving 80% of outcomes. Populating a client’s business dashboard with strategically aligned indicators creates an environment of measured predictability.

Firms need to adopt specific advisory protocols that support each of these value-adding levels. For example:

  • A Hindsight action step would include organizing the chart of accounts so a client can access more relevant performance feedback by department, service, or product line.
  • An Oversight action step might include setting alerts/triggers when key margins go outside of desired perimeters.
  • An Insight action step might include regular Financial Fluency training sessions for clients and their key managers.
  • A Foresight action step would include the development of 5-7 key performance indicators that provide strategically relevant feedback about mission critical activities.

Advisory services are not the same as reporting on what has already happened. They must include deeper insights and relevant perspectives that support the overall objectives of an organization. To make sure every client benefits from and every team member can provide advisory services, firms must have standardized protocols to avoid falling into the unleveraged trap of Random Acts of Consulting.

Editor’s Note: Edi Osborne has just released a new book, "Firm Forward, A Business Fable about an accounting firm’s journey From the Land of Compliance to a World of Reliance." It is available at Amazon.com.