{"id":52709,"date":"2017-09-25t05:00:36","date_gmt":"2017-09-25t09:00:36","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=52709"},"modified":"2017-11-28t10:54:31","modified_gmt":"2017-11-28t15:54:31","slug":"accountants-last-trusted-advisors","status":"publish","type":"post","link":"\/\/www.g005e.com\/2017\/09\/25\/accountants-last-trusted-advisors\/","title":{"rendered":"accountants are the last of the trusted advisors"},"content":{"rendered":"
<\/a>how to quantify your level of trust.<\/strong><\/p>\n by rob nixon<\/i><\/p>\n i believe accountants are the last natural trusted advisors.<\/p>\n more on strategy: <\/b>how much should partners make?<\/a> | the entrepreneurial accountant: an oxymoron?<\/a> | growth is all about the clients<\/a> | change is on the horizon<\/a> | order takers and history writers<\/a> | the bizarre habits of accountants<\/a> | 12 traits of a better you<\/a> | 8 ways to become super-efficient<\/a> | sales is like workflow management<\/a> think about it\u2026<\/p>\n <\/p>\n and the lawyers … some would say they never had trusted advisor status in the first place!<\/p>\n sure there are some less than scrupulous accountants who put their fingers into the trust accounts (always with the view of paying it back) or blatantly stealing from clients.<\/p>\n i remember one memorable meeting at a “soon to go into liquidation” accounting firm for well below the line (illegal) activities. i casually asked one of the long-standing employees, \u201cso how much of clients\u2019 money did you put into these failed investment schemes?\u201d answer: \u201ci dunno, somewhere in the order of $200 million to $300 million over a 10-year period.\u201d<\/p>\n i was utterly gobsmacked. even though the track record was failure over the years, they still had enough trust to extract $20 million to $30 million per year from the client base. the firm was getting 10 percent to 15 percent commission on the money regardless of the success of the program. incentives like that drive the absolute wrong behavior. no wonder most of the financial planners who have been selling commission-based products get themselves into so much trouble!<\/p>\n even with big accounting scandals like enron and arthur anderson, the trusted advisor status of the accounting profession remains.<\/p>\n it\u2019s almost like when you become qualified you get your fancy certificate that you proudly hang on the wall and it comes with a permanent tattoo for your forehead that says, \u201ctrust me \u2013 i\u2019m an accountant.\u201d<\/p>\n so why do we trust accountants? is it the ethical standards that they are bound by? is it that there have not been that many (in the scheme of things) scandals? is it that we are told to trust them? is it that the professional bodies (that all real accountants are members of) actually mean something? is it the piece of paper on the wall? is it that clients are typically referred to an accountant and we trust the referee?<\/p>\n all of these certainly help. however, i think the main reason we trust accountants is because they know more about our financial affairs than anyone else. and financial affairs are a very personal and confidential matter. accountants know the intimate details of our profit, debt, wealth, revenue and cash flow.<\/p>\n accountants can influence our profit, debt, wealth, revenue and cash flow positively (by offering additional help) and negatively (by doing nothing).<\/p>\n to give you an idea of the size of your level of trust, consider the following equations.<\/p>\n profit trust equation: using the annual compliance results,<\/strong> add up all the profit that your business clients achieved over the past 12 months. if your average client did $250,000 in profit and you had 200 of them then that would be $50 million of profit that you could positively or negatively influence.<\/p>\n debt trust equation: with this equation add up all of the business and personal debt of all of your clients \u2013 business and personal clients. you might have 200 business clients with an average business debt of $350,000 and 300 personal clients with an average household debt of $250,000 so that would be $190 million of debt that you could positively or negatively influence.<\/p>\n wealth trust equation: take the net balance sheet position of your business and personal clients. if you had 200 business clients with a net balance sheet average of $1 million and 300 personal clients with a balance sheet position of $500,000 then that would be a whopping wealth under your custodianship of $350 million that you could positively or negatively influence.<\/p>\n revenue trust equation: again with the annual compliance results, add all the revenue that your business clients achieved for the past 12 months. you might have 200 business clients and they had average revenue of $1 million each; that would equate to $200 million of revenue that you could positively or negatively influence.<\/p>\n cash flow trust equation: if your business clients have an average free cash flow balance of $100,000 per year and you had 200 clients then that would be $20 million of free cash flow that you could positively or negatively influence.<\/p>\n having trusted advisor status is a very privileged position to be in. it\u2019s a big responsibility as well.<\/p>\n i think it is the accountant’s duty of care to leverage off the trusted advisor status and positively help clients by offering additional services that really make a difference to the clients’ financial condition.<\/p>\n","protected":false},"excerpt":{"rendered":" how to quantify your level of trust.<\/strong>
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\nby rob nixon<\/em><\/p>\n","protected":false},"author":1840,"featured_media":49750,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[2254,3120],"tags":[],"class_list":["post-52709","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-growth","category-pro-member-exclusive"],"acf":[],"yoast_head":"\n