1. Financial Services Business… Why be involved?

2. What types of services? Imagine a line which describes the range of your services… Forward-lookingHistoric perspective

3. What types of services? Valued-Added Forward-looking Commoditised Historic perspective Imagine a line which describes the range of your services…

4. What types of services? Type (2) Services Valued-Added Forward-looking Type (1) Services Commoditised Historic perspective Imagine a line which describes the range of your services…

5. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate Imagine a line which describes the range of your services…

6. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate Where would you place a set of self-employed accounts? Accounts

7. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate Where would you place an audit? Accounts Audit

8. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate What about a tax-return? Accounts Audit Tax-Return

9. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate How about some other services? Accounts Audit Tax-Return Business Plan Benchmarking Tax Planning

10. What types of services? Type (2) Services Valued-Added Forward-looking Clients want Type (1) Services Commoditised Historic perspective Clients tolerate Let’s consider what might come next… Accounts Audit Tax-Return Business Plan Benchmarking Tax Plan Profit Improvement Strategic Planning Financial Planning

11. What types of services? So how might financial services ‘fit’ as you develop your accountancy practice’s business model? Where you have already identified a need to move towards ‘strategic’ services to compensate for lower profitability in other areas Where you have already successfully developed a range of ‘strategic’ services Where you are outsourcing certain Type (1) services, and thereby have the manpower to develop new markets Where you have struggled to compete on price with traditional services

12. How might financial services integrate? Tax Return Tax Planning Exercise Inheritance Tax Plan Income tax mitigation via pension plan Tax deferral using an Investment Bond Financial Planning Issues Here’s just one example…

13. Reasonable conclusions (1)… 1)Offering a financial planning service to accountancy clients is consistent with any drive to deliver other forms of strategic service 2)Financial planning is an area of discipline which integrates naturally with most other services offered by accountants and other tax-professionals

14. Some more compelling reasons… For offering financial-planning advice to your clients… Reason (1) In the context of external referral relationships: Small, local IFA firms are in decline, and research indicates that in a majority of cases, the service delivered to clients is not satisfactory from the perspective of the introducing accountancy firm, and frequently does not strengthen or reinforce your relationship with clients.

15. Some more compelling reasons… For offering financial-planning advice to your clients… Reason (2) Your clients want a genuine ‘one-stop shop’ for their financial needs. Unfortunately, in the new, grey depolarised world, consumers are even more confused about the advice they are getting, even though they are bombarded with ever more information. Accountants are in a privileged position, and are genuinely able to deliver impartial and independent (‘whole market’) advice.

16. Some more compelling reasons… For offering financial-planning advice to your clients… Reason (3) Passively allowing clients to deal with other kinds of intermediary, or indeed positively introducing them to an IFA deprives your firm of the equity value of such business. Over the longer term, the cumulative value of ‘renewal’ income streams allows you to build the capital value of your business. External referrals is effectively about building someone else’s business.

17. And then there’s the cash… At the risk of being simplistic about commission & fee levels, here is a typical case-study: Your client has an IHT problem,& needs to create an immediate reduction in the value of his estate As part of a raft of planned actions, you set up an Estate Planning Bond for £100k, which immediately reduces his estate by £50k, gifts the whole £100k to his beneficiaries, whilst continuing to provide a net income of £5kpa to your client. Client happy? You bet! Are you happy? You’ve just earned £3,500 plus £500pa for the lifetime of the Bond

18. And then there’s the cash… Here’s another example, simply based on renewal income: Your strategy might simply be to bring clients’ existing investments under your control, so you can provide ongoing advice – here’s how it might work out… Year Assets ‘Captured’ Your Income 1£350,000£1,750 2£525,000£2,625 3£700,000£3,500 4£875,000£4,375 5£1,050,000£5,250 Your clients are probably getting poor ongoing advice in relation to their existing arrangements – why shouldn’t you change that, and create a new revenue stream as a result?

19. Reasonable conclusions (2)… 1)Offering a financial planning service to accountancy clients is consistent with any drive to deliver other forms of strategic service 2)Financial planning is an area of discipline which integrates naturally with most other services offered by accountants and other tax-professionals 3)Financial planning services are profitable and can be developed to replace declining or flat revenue streams 4)Financial planning services can build equity value by giving rise to ‘renewal’ income

20. And there’s more… What are your competitors doing? Reason (4) Offering financial planning services allows you to differentiate yourself from your main competitors by something other than price. Avoid the downward spiral of profit-margins & leverage your existing ‘human capital’ by joining up financial-planning to your existing range of services.

21. That’s all for now, but… Inevitably, presentations like this can be oversimplistic, and of course they are not informed by the real circumstances of your own practice. If you would like to discuss in more detail how financial planning could integrate with your own accountancy firm’s business model, do please give us a call on 02920 494495. Alternatively, please visit us at www.2020fs.co.uk ValidPath Ltd is the FSA-regulated Network specialising in accountancy firms and other tax-professionals. ValidPath Ltd is authorised and regulated by the Financial Services Authority. ValidPath Ltd, Unit 16, The Globe Centre, Wellfield Road, Cardiff CF24 3PE