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Getting in to bed with Accountants

• Paul Lothian BA (Hons), FPFS, ACII, CFPcm
• Chartered Financial Planner
• Director, Verus Wealth and A2B Wealth

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How to engage accountants formally and
maximise the value of the relationship . . .

• Why bother engaging with accountants?
• Formalising the relationship
• Maximising the impact and adding value

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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 C55M
• Typical AUA per client 200,000
• 35 of income attributable to client referrals
  from JV partners

• Established 1933
• Two offices (Dundee and Montrose)
• 5 partners
• 33 staff
• Turnover C1.6M

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• Established 2011
• 40/60 ownership split
• 2 advisers plus 3 staff
• 35 recurring income
• C 30 clients
• AUA C17M
• Typical AUA per client 400,000
• 95 of income attributable to client referrals
  from JV partners

• Established 1992
• 13 partners
• C150 staff
• Turnover C18M

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Surrounding A2B Wealth
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Directly authorised
Appointed Representative
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• 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

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• 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

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Our books are balanced. 50 of the numbers are
real and 50 are made up!
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Challenges

• The accountant archetype

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Thinking
Interactive Exercise!
Extravert
Introvert
Feeling
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Introverted Thinking
Extraverted Thinking
Introverted Feeling
Extraverted Feeling
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Extraverted Thinking
Introverted Thinking
Introverted Feeling
Extraverted Feeling
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On a good day
Competitive Demanding Determined Strong-willed Pur
poseful
Cautious Precise Deliberate Questioning Formal
Caring Encouraging Sharing Patient Relaxed
Sociable Dynamic Demonstrative Enthusiastic Persua
sive
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On a bad day
Aggressive Controlling Driving Overbearing Intoler
ant
Stuffy Indecisive Suspicious Cold Reserved
Docile Bland Plodding Reliant Stubborn
Excitable Frantic Indiscreet Flamboyant Hasty
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Challenges

• The accountant archetype
• Differences in Corporate Culture
• (some) CAs perception/ pre-conception of IFAs
• Accountants existing IFA connections
• Fees ad-valorem not favoured by many CAs
• Generally reactive rather than proactive
• Partner buy-in/ support varies
• Can be protective of client bank
• Aligning with the CAs practices/ staff policy
  etc
• Level and nature of CA firms involvement in
  strategy/ business management

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Joint Venture Considerations

• Chartered Accountants and/or Solicitors?
• Preferably with no existing financial planning
  offering
• Firm size? 5 partners 1 planner
• Format
• Introducer arrangement?
• New service offering (branding)?
• New company?
• On-site or off-site?
• FSA authorisation e.g. AR or direct?
• Incorporated or partnership/ LLP?

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IFA Ltd
Accountancy Partnership
Holding Co. (or LLP)
NEW CO
Shareholders in IFA
AR of IFA or directly authorised?
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Joint Venture Considerations

• Chartered Accountants and/or Solicitors?
• Preferably with no existing financial planning
  offering
• Firm size? 5 partners 1 planner
• Format
• Introducer arrangement?
• New service offering (branding)?
• New company?
• On-site or off-site?
• FSA authorisation e.g. AR or direct?
• Incorporated or partnership/ LLP?
• If on-site, rent/ management charge (whats
  included?)
• Directors/ Board members?

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Joint Venture Considerations continued

• Shareholding structure (eg alphabet shares)
• Equity participation
• Profit share formula/ mechanism
• Costs control
• Exit strategy/ mechanisms
• Valuation of shares on leaving (Good leaver/ bad
  leaver)
• Restrictive covenants. (Who owns the client
  relationship?)
• Capitalisation (eg equity and /or loans)
• Principals contract for services / contract of
  Employment
• Principals remuneration / flexibility

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Explain to me again why enjoying my life when I
retire is more important than enjoying life
now.
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The Approach

• Dear Mr Accountant,
• If I can show you a way that your firm could
• Increase its revenue and profit
• Build a valuable business with high levels of
  recurring income
• Widen your firms 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 investmentadvice your
  clients are receiving
• Provide opportunities for collaboration and joint
  marketing initiatives
• Would you be interested?

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The proposal stage

• 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). Whats
  its USP?
• - For whom? (Target markets)
• - How?
• - Projected P/L and cash-flow for 3 years
• Marketing plan (more detail on how the business
  plan will be achieved)
• - Internal and external marketing strategies

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The proposal stage (some tips for dealing with
Cool Blue energy)

• PATIENCE IS REQUIRED!
• DONT APPEAR PUSHY
• PROVIDE DETAIL
• BE PREPARED/ ORGANISED
• BE PUNCTUAL
• DELIVER WHAT YOU PROMISE (ON TIME)
• KEEP IT FORMAL and BUSINESS-LIKE

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Maximising the Impact and Adding Value

• 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

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Hear it from the horses 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,
  advanced-level 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
  PartnerAnderson, Anderson Brown LLPChartered
  Accountants

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Questions?
pmlothian_at_veruswealth.co.uk
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THANKS FOR LISTENING!
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