Many professions are having to adapt their services to compete with innovations in digital technology. Research from Oxford Economics and Virgin Media Business shows that some 41,000 jobs could be made obsolete over the next two years as companies and employees struggle to adapt to rapid technological change.
Accountancy firms are expanding their professional credentials to include financial advice and wealth management services. The primary task of an accountant is to prepare and examine financial records. They ensure records are accurate and that taxes are paid properly and on time.
In comparison, a wealth manager provides a combination service that includes financial advice, legal planning and accounting and tax services. Often they work as a broker to buy and sell stocks on behalf of clients.
On the surface there is incompatibility between the two professions. Accountants are considerably more analytical while wealth managers are more entrepreneurial, but in reality they are closely aligned.
Accountants are adapting their services to compete with technology
Accountancy firms have moved to strengthen client relationships and create additional revenue opportunities, many have done so in order to protect themselves from becoming victims of digitalisation.
The development of cloud technology has been a fundamental game-changer for businesses and accountancy. It is now significantly easier to deal with accounting, invoicing and backing up files, making the traditional role of accountants significantly less valuable. Modern accountants therefore need to be more proactive, providing additional services to clients to retain their value.
Some firms have embraced cloud technology. Alongside their digital accounting services, contractor accountants 3 Wise Bears offer tutorials to provide quick and effective support for businesses and contractors wanting to use the software themselves.
Another way of accountants expanding on services is to become wealth managers, although it is not always a simple extension of skills. Wealth managers need to have indepth knowledge of the stock market in order to manage clients’ finances effectively, something accountants are not usually trained in.
Wealth managers are mostly transactional which goes against the consultative grain of an accountant. Furthermore, accountants are trained to spot financial problems while wealth managers implement solutions to the problems.
The accountant and the wealth manager might seem like an unlikely synergy but it can be a success. As long the accountant understands that the wealth management unit cannot be run like an accounting firm and vice versa, the two can work in unison.
While there are likely to be significant opportunities to deliver wealth management to all types of clients, business owners and high-net-worth families are regularly the best clients for wealth management practices. But if you’re not yet in the financial ranks of wealth management firms like Investment Quorum’s clients, accountancy firms that offer wealth management could be a good solution.
Accountancy firms see benefit in being able to work with their clients in a way that is unique to their profession. Clients already view their accountants as a trusted advisor so they are generally more willing to divulge their overall financial picture with little hesitation.
Another advantage is that clients don’t feel that they are being sold something, due to the consultative nature of accounting. They view the investment advice they are receiving as part and parcel of their tax, estate and business planning.
Accounting firms that are able to recognize opportunities, develop client-specific business strategies and have the proper wealth management solutions at their disposal can exponentially increase both their client’s and their firm’s profitability. This is why more accountants are likely to continue expanding their services over the coming years.