An accountant’s job is to create useful and accurate financial statements and records. The role of an accounting firm, however, is somewhat different. To bring in profits, pay workers and stay in business, accounting firms must provide as much value as possible to their clients. That’s where financial services come in. Increasing the amount of services they provide can help firms provide additional value to clients old and new.
What Accounting Firms Gain By Adding Financial Services
How do accounting firms engage clients? They can use their communication skills and friendliness to develop and grow strong professional relationships with their clients, but they should already be doing that. They can offer accounting services at a lower cost to retain clients, but that has a negative effect on the firm’s income.
Expanding their expertise to offer new services is one way to add value, even if the accounting firm is already doing everything it can to build strong client relationships without decreasing profits. When a firm begins providing financial services, it can do more business with existing clients, in turn bringing in more money. It can also attract new clients who are primarily looking for financial services and then cross-sell tax preparation and other accounting services to these new clients.
The Intersection between Accounting and Financial Services
Accounting and financial services are closely connected. In fact, Accounting Today called financial services “one of the most natural value-added services” accountants can offer their clients, and Accounting Web noted that financial services firms have long taken tax preparation business from accounting firms.
In many ways, it makes perfect sense for accounting professionals to handle services like insurance, investment management and personal financial planning. After all, today’s accountants often act as consultants, helping clients plan for financial goals and reduce financial waste. It may seem like a logical step for the same professional who suggests buying insurance to also be able to sell that insurance, or for the accountant who points to investments as the best way to reach a goal to then help the client choose the right investments for that strategy.
However, just because the two industries are similar doesn’t mean that getting into financial services is the right choice for every accounting firm, or that it’s an easy task to accomplish. Accounting firms must prepare for, strategize and market their financial services well to overcome the obstacles they face when expanding into financial services. If accounting professionals try to handle financial services without developing the necessary expertise, firms try to operate short-staffed, or clients are never made aware that these new services are available, the attempt is likely to fail – and could cost the firm some of its current clients in the process.
With an increasing number of accounting firms turning to financial services to add value to their clients and their business, accounting students will likely find themselves needing to provide financial services as well as accounting services in their future careers.