Best Practices of Client Advisory Services

What are client advisory services?

Accounting professionals are adapting to clients’ changing needs, which demand greater insight and value from their advisors. For many, managing a growing business can be daunting. Making wise financial decisions to help their companies grow requires understanding various investment options, tax laws, market trends, and cybersecurity. 

CPAs providing advisory and strategic consulting services through client advisory services can build a year-round revenue stream.  

Advances in technology mean accounting firms can leverage cloud-based solutions to help their businesses find a new approach to the traditional back-office structure by providing services like bookkeeping, compliance, advisory services, and advanced management reporting. CAS delivers reliable advice and strategy to help companies better understand their financial wellness while guiding them to make decisions that encourage growth. Knowing the risks and liabilities of offering these services is also essential. 

Give clients a holistic financial picture

The best firms offering client advisory services find success by building strong personal relationships with their clients and understanding their goals, risk tolerance, and current financial landscape. No two businesses are alike, so this will help you tailor your advice to them. They must also understand your fee structure and the investment strategies you recommend. 

Offer clients a holistic financial picture that includes a thorough accounting of their finances, including their short-term and long-term goals. 

Your client’s financial future is more than plugging numbers into a spreadsheet. Understanding how they envision their financial futures and how much risk they’re willing to take is critical. It also means being there to help guide them through significant ups and downs within their industry. 

Also read: Cryptocurrency and Accounting: What Do You Need to Know?

Advice, not leadership

Offering client advisory services can be a challenge that reshapes how your client thinks about their business. Creating a successful financial roadmap for your clients means ensuring that adding CAS is complex. The last thing you want is for clients to think your firm is hopping on a trend. 

Therefore, your firm must dedicate the appropriate amount of money, staff, resources, and time to building the CAS firm. This might include adding experienced project managers and client advocates who can work closely with clients, learn about their business, and provide regular insights. It’s a full-time endeavor that you can’t sustain with part-time effort.

Mark Koziel, CPA at Allinial Global, says it’s important to remind your clients that you are not working as management inside their firm. What you’re providing is advice.  

“At the end of the day, we have to make the client understand those are their decisions. We’re just providing the information to make it a more informed decision. We’re going to talk about what we’re trying to accomplish. Here are your options to get it done. Here are the pluses and minuses of each. I can’t say where my client’s level of risk is. They have to determine that. Even with the simplest tax returns, it’s the client taking the position. Not the firm.”

Also read: How to Defend Against Third-Party Cyber Risk

Understanding your clients’ risk level

When choosing client advisory services, ensure your clients consider their risk level with investments, purchases, and spending. Doing so will help ensure that your advice works within the frame of their financial goals. 

“Communication is such an excellent risk management tool,” McGowan Pro Senior Vice President Stephen Vono said. “You’re helping them understand information so they can make a better decision.” 

Some clients might be more risk-averse than those willing to take more considerable risks with a higher potential for gain. 

It also means understanding what makes a client’s industry different. Learning a specific industry’s operations, potential hazards, regulatory landscape, and other relevant factors is essential in helping you create the picture of their financial future. Specializing in a particular field enables specialists to acquire certain institutional knowledge. Medical professionals have unique regulatory challenges compared to a company focused on shipping. As regulations become more stringent, it’s crucial to provide nimble professionals who can take the time to understand a client’s unique needs.

Also read: 3 Ways to Minimize Risk When Outsourcing Accounting Services

Tech is not an afterthought

Companies big and small might say they’re not ready to leap to the cloud. Keeping a small server on-site in a broom closet might comfort your client. Still, an inability to scale its cybersecurity jeopardizes client data and increases the risk of running afoul of changing regulations. 

Data integrity is critical in the client advisory services space and should give your CAS staff time to train and understand new technology so they understand what might be available to their clients. Cloud services and apps can help them build efficiencies across their entire enterprise, allowing them to scale up or down depending on their growth. It increases confidence that their customers’ data is safe, fosters increased collaboration, reveals new insights, and stays in front of the changing regulatory environment. 

“I love the sports analogy. It’s not that gut decision anymore,” Koziel said. “Everything is AI-driven and data analytics. Here are the data points that tell us our options. It’s up to you to decide where to go. It is the client who still has to make that final decision.”

Say no to virtual CFO

While a CAS can provide a short-term and long-term outlook for your business, it’s not a substitute for having someone who understands your particular industry and signs off on final financial decisions. 

While technology is essential to build an environment of efficiency and safety, virtual CFO services might bring a different level of experience and expertise that builds trust among your clients. Every company is different, and a lack of face-to-face or tangible interaction means the virtual CFO might not fully understand a company’s unique financial needs, regulatory environment, and ultimate goals.

McGowan PRO puts you first

When offering client advisory services, a properly drafted engagement letter is critical. Accountants must clearly define the scope of services, the client’s and firm’s responsibilities, the deliverables required, and the limitations of the relationship. It’s good practice to reissue an engagement letter annually to confirm the specifics outlined initially and make any necessary adjustments. 

Accountants must also be aware that CAS is a non-attest service, and the practitioner must be mindful of the potential independence impairment consequences. 

Partnering with an experienced and knowledgeable insurance provider can help ensure your firm is taking the necessary precautions in many areas of operations—including client advisory services.

McGowan PRO offers flexible, comprehensive coverage through our Accountants Professional Liability and Errors & Omissions Insurance policies. Our customer-first approach to our partnerships in a variety of industries—including accounting, investment advising, law, and more—drives us to provide exceptional coverage options at reasonable premiums. Ultimately, your satisfaction and success are our highest priority. 

To lean more, contact a McGowan PRO underwriter today.