Getting in to bed with Accountants Paul Lothian

“Getting in to bed with Accountants” Paul Lothian BA (Hons), FPFS, ACII, CFP cm Chartered Financial Planner Director, Verus Wealth and A 2+B Wealth

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

is a joint venture with:

• • Established 2005 50/50 ownership split 2 advisers plus 3 staff 85% recurring income C 120 clients AUA C£ 55 M 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 C£ 1. 6 M

• • Established 2011 40/60 ownership split 2 advisers plus 3 staff 35% recurring income C 30 clients AUA C£ 17 M Typical AUA per client = £ 400, 000 95% of income attributable to client referrals from JV partners • • Established 1992 13 partners C 150 staff Turnover C£ 18 M

Surrounding A 2+B Wealth Accounting Services Audit VAT Personal Corporate Tax Finance Wealth Corporate Payroll Tax EETS! Outsourcing Finance

Directly authorised Appointed Representative

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 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

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

“Our books are balanced. 50% of the numbers are real and 50% are made up!”

Challenges • The accountant “archetype”

Interactive Exercise! Thinking Introvert Extravert Feeling

Introverted Thinking Extraverted Thinking Introverted Feeling Extraverted Feeling

On a good day… Cautious Precise Deliberate Questioning Formal Caring Encouraging Sharing Patient Relaxed Competitive Demanding Determined Strong-willed Purposeful Sociable Dynamic Demonstrative Enthusiastic Persuasive

On a bad day… Stuffy Indecisive Suspicious Cold Reserved Docile Bland Plodding Reliant Stubborn Aggressive Controlling Driving Overbearing Intolerant Excitable Frantic Indiscreet Flamboyant Hasty

Challenges • The accountant “archetype” • Differences in “Corporate Culture” • (some) CA’s perception/ pre-conception of IFA’s • Accountant’s 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 CA’s practices/ staff policy etc • Level and nature of CA firm’s involvement in strategy/ business management • “Fair and equitable” division of profits

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?

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

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 (what’s included? ) • Directors/ Board members?

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) • Principal’s contract for services / contract of Employment • Principal’s remuneration / flexibility

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

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 firm’s 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 investment advice your clients are receiving Provide opportunities for collaboration and joint marketing initiatives Would you be interested? ”

The proposal stage • • Make a business case (why should the accountants consider doing it? – “WIIFM? ”) • • • Have letters of commendation/ client testimonials Have a clearly articulated client service proposition (including an investment “philosophy” and basis of fees/ charges) Suggest that the key decision maker(s) becomes a “client” Business plan - What will the business do? (Purpose). What’s 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

The proposal stage (some tips for dealing with “Cool Blue” energy) • PATIENCE IS REQUIRED! • DON’T APPEAR PUSHY • PROVIDE DETAIL • BE PREPARED/ ORGANISED • BE PUNCTUAL • DELIVER WHAT YOU PROMISE (ON TIME) • KEEP IT FORMAL and “BUSINESS-LIKE”

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-1 s” with partners/ managers • Regular and frequent client “touch points”

Hear it from the horse’s mouth! “Financial advisers looking to have clients referred to them by accountants should exhibit the highest professional standards and all that entails: technical knowledge and expertise, advancedlevel 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 Partner Anderson, Anderson & Brown LLP Chartered Accountants

Questions? pmlothian@veruswealth. co. uk

THANKS FOR LISTENING!