Traditionally, accounting firms have benefited from a longstanding and loyal client base that has provided a strong pipeline of regular tax and compliance work, together with a steady stream of new clients through ‘word of mouth’ referrals from existing clients. While this trend is likely to continue in the short term, the advent of new technology and advanced data analytics result in a growing risk of these clients being targeted to have their financial needs serviced outside the accounting firm.
As individuals and businesses continue to expand their use of online channels as both a means of transacting and communicating, technology is being used to collect increasingly granular information and improve client engagement. While there are privacy requirements that companies must adhere to, those with significant client bases and advanced data analytics capabilities have an abundant and growing source of rich data. These companies are beginning to use their data in a more sophisticated manner to expand the products and services that they offer their clients. The data is also being used to target clients at the right trigger points with the right products and services.
In line with this trend, we are seeing a growing number of non-traditional competitors enter the financial services industry. While these companies may be yet to establish a strong financial services brand, they will generally have strong client relationships in other services and, importantly will be able to use data analytics to identify advice trigger points and target their marketing to clients accordingly.
While accounting firms also have access to rich client data, it tends to be based on the close relationships and deep conversations that they have had with their clients over the years and is often not captured in the firms client databases. The ability to perform sophisticated data analytics is therefore generally much lower. The challenge for accounting firms therefore, is ensuring that when their clients receive ‘trigger point’ marketing from other service providers, that they have already been offered (and hopefully received) that service from the accounting firm. In these situations, the clients should have no reason to leave the accounting firm to have their financial needs met elsewhere.
The benefits of offering higher value adding services to your clients now, is that it will help keep the loyal client base and strong pipeline of clients that the firms have traditionally enjoyed.
Accounting firms who offer higher value-adding services to their clients will have a much stronger value proposition that will allow them to retain their clients through industry change, including the advent of new technology and new competitors.
David Lane is the chief executive of Count Financial Limited.
