With clients placing little value on the paperwork and compliance functions performed by firms, it may be time to shift the focus of services towards client aspirations.
The introduction of Future of Financial Advice (FOFA) reforms highlighted the importance that accountants put on providing SMSF services. This is certainly evident on accountants’ websites, where it’s common to see a section, or even a separate page, proudly talking about the technical services they provide. Typically this content centres upon how they can assist with establishing an SMSF and the annual compliance requirements that they administer. It’s all dressed up to sound important and dynamic, but is it really?
Many accountants expressly target growth in this aspect of their business. Accountants overlook the uncomfortable fact, however, that their core SMSF service is the exact same service provided by others who would happily take over their client.
No client wants an SMSF
It’s my contention that clients don’t actually want an SMSF per se. Instead, they want what the fund can actually do for them. While this means different things to different people, these outcomes will likely include:
- Having the capital to fund a great lifestyle in retirement
- A secure place to accumulate wealth
- Building a portfolio of assets tax effectively
- Being the cornerstone of a personal risk strategy
Sadly, your clients don’t actually care about the paperwork you generate on their behalf. Just so long as their fund stays on track and clear of trouble with the regulators, they will sign whatever you prepare.
Doing a great compliance job is not nearly enough
Suppose that you have done the perfect job and at a respectable fee. Surely that’s all that’s required, right? Wrong. Where clients really sit up and take notice is where you demonstrably advance them towards their goals. Subject to how you are handling the licensing issue, helping clients achieve better outcomes is where you must focus.
Whilst taking care to respect the FOFA rules, I believe there are four key roles you should perform with your SMSF clients:
1. Your role as a leader
Why not help the client to create an SMSF charter when their fund is established. I envisage that this would be a one-page summary in large font which explains the core purpose for the fund being set up and setting the expectation what is going to happen to achieve this outcome. Thereafter your annual meeting won’t be so much about compliance but the extent to which the fund made progress towards its core purpose during the year.
2. Your language
How you express yourself with the client about their SMSF is also important. For example, translate their objectives into pictures of their family, their aspirations and progress towards targets in the reports you prepare. Such encouragement will help clients feel very positive about the work that you are doing together.
3. Your role as an educator
Clients also benefit from their accountant helping them to appreciate how their outcomes could be improved. Take these three examples:
Comparative investment performance
How often do clients dump money into super without giving any thought to how it is invested? Conversely, with helpful data, your client will come to appreciate the implications of adopting different investment strategies.
Timing of contributions
Helping your business clients to appreciate that their returns will be better over the long term if they contribute regularly throughout the year rather than in a lump sum in mid-June is valuable. Incorporating such payments into their business cash flow budget would be better still.
Quantum of contributions
Plenty of clients are yet to fully appreciate that they now cannot contribute large sums as retirement approaches. Given how low the caps have been set, make your clients aware that contributing more than the minimum each year will make a massive difference to their financial outcomes.
4. Your role as a facilitator
Whilst an SMSF is a powerful tool for asset protection and estate planning, your clients will not know about this unless you make them aware. More than this though, accountants are ideally placed to bring together the expert legal and investment advisers required to ensure that clients’ funds are optimised.
SMSFs could indeed be a great way to grow your firm’s recurring revenue. However looking at this as the “number of funds multiplied by average annual compliance fee” sells your role short.
On the other hand, focusing on what matters to clients will most likely increase the average fee, along with the referrals you receive.
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.