size doesn’t matter. interpersonal skills do.
by anthony glomski and russ alan prince
your $5-million high-net-worth practice
the accounting industry is comprised of several colossuses, many midtier firms and thousands of small firms. in a bustling economy, most smaller firms can do quite well. when times get more difficult, as they are today, all accounting firms are under pressure. nevertheless, they can still do exceptionally well.
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one of the keys to success for small accounting firms is being able to provide integrated solutions. while continuing to deliver compliance services, small firms can benefit from developing and highlighting high-demand, value-added advisory capabilities. they can then use these advisory capabilities to differentiate themselves effectively. many larger firms continue to grow because of their advisory services, and smaller firms can duplicate this same approach.
simultaneously, smaller firms would usually be well served by identifying and focusing on specific niches and specialties. for example, one of the most significant growth opportunities for accounting firms of any size is the family office practice. the aim is to deliver a range of integrated expertise to high-net-worth clients. included here are administrative services, wealth planning and special projects. some family office practices also provide financial products – investment management and life insurance.
a well-managed family office practice has exceptional margins as well as great realization rates. because high-net-worth clients regularly have a diverse set of needs and wants, addressing them by using the expertise of different accountants at the firms or strategic partners such as lawyers and bankers is common.
family office practices are very dependent on the interpersonal skills of the accountants involved. the size of the firm is often a non-issue. in fact, many very wealthy families prefer working with a boutique firm instead of a larger one.
critical to the success of a family office practice is sourcing high-net-worth clients. a good starting point is the wealthier individuals and families who are already clients of the firm. by developing a deep understanding of their circumstances, goals and concerns, many of these current clients are likely to be interested in family office services.
another way to garner high-net-worth clients is to build strong relationships with other professionals such as lawyers, wealth managers, bankers and insurance agents. there are processes accountants can use to help these other professionals build their practices, resulting in them providing a steady stream of new high-net-worth clients to the accounting firm’s family office practice.
to excel in today’s hypercompetitive environment, smaller accounting firms need to be agile and adept at bringing in and servicing high-quality clients. by developing high-margin, value-added advisory capabilities such as family office practices, smaller firms are regularly able to generate substantial revenues. for some smaller accounting firms, failing to build these high-value practices can potentially result in a slow demise or stagnation or being absorbed by larger accounting firms.