How structure diagrams can boost client understanding and reflect well upon your firm.
Condensing complex legal structures into one page diagrams is a great way of helping clients to understand their situation and the work you are doing with them.
Start speaking to any accountant about the interaction of related entities and very quickly a “mud map” is sketched out depicting the relationships, who owns what and where the money flows. This is because accountants have learned that this is a great way to capture the essence as well as the details of what’s going on.
However, rather than being buried as rough notes on a client file or (worse) erased from your whiteboard, I suggest it’s time to tidy up these sketches and put them to work. Essentially, there’s a compelling case to present these diagrams more professionally and to incorporate them into your everyday processes.
The perfect communication tool
A well-presented structure diagram is a great way to help clients understand their structure. It’s here that clients can enhance their knowledge of the different entities that make up their group. For example, this is where clients come to appreciate that they might control certain assets without owning them personally – very helpful for an asset protection discussion and for estate planning.
Diagrams are also a great way of helping other professionals to quickly come to grips with a client’s situation. This of course includes your team members and extends to the client’s other advisers – financial planner, lawyer, finance broker etc. During my time in practice, I found such diagrams particularly enabling for the interaction of accountant and financial planner.
Producing diagrams quickly and consistently
The key of course is to be able to produce these diagrams quickly and consistently. Ideally, this will require minimal training and expense. Naturally the format should lend itself to emailing. The ability to projecting up onto a big screen would also be essential.
If you are looking for such a tool to use in your firm, I recommend that you consider Vizulate1, an Excel-based solution developed by a highly respected accounting firm. With Vizulate, the user is empowered to quickly tailor diagrams to suit each client’s circumstances, with helpful prompts to incorporate details such as directors and underlying ownership. Because Excel provides a wide range of presentation options such as arrows, comment fields and a full colour palette it is within every user’s reach to produce first class diagrams which will prove to be excellent ambassadors for your firm.
The relevance for financial planners
For financial planners seeking to work with accountants, an understanding of structural diagrams is particularly important. So much the better if producing structure diagrams for clients becomes a core competence of your firm.
It’s remarkable the value that a well-constructed structure diagram can convey. Be this placed at the front of financial statements, as an appendix to finance applications or utilised to summarise strategic alternatives, such a diagram enables clients (and others) to understand what’s going on and ask questions to confirm their understanding.
Scott Charlton is a Director of Slipstream Coaching, a company dedicated to assisting financial practitioners achieve their potential. Since 2002, Scott has been applying and refining a practical approach to performance improvement based upon his own experiences as a professional practitioner and from coaching hundreds of financial services firms.
Scott is an author of three books, written for professionals in practice. He is also a Fellow of Chartered Accountants Australia and New Zealand, a member of CPA Australia and an Associate Fellow of Australian Institute of Management. For more information on Scott and his professional activities, refer to www.scottcharlton.com.au. Scott can be contacted via phone 0409 870 330 or email firstname.lastname@example.org.
1 For further information about Vizulate, refer to www.vizulate.com.au
2 For further discussion on this topic, please refer to pages 83 to 86 of my book Partnering with Accountants – refer to www.scottcharlton.com.au/Partnering_with_Accountants.php