Are you a trusted business advisor?Now is the time to truly become one. The complete Level 5 methodology is now available in an online training platform. With more than 100 educational resources including downloadable documents, presentations, and spreadsheets, instructional videos, and hands on tutorials, this training will give you the confidence to apply your current skills in new ways. Act now!
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Nearly every accountant I’ve met answers that question with a resounding, “Yes!” And yet, when I ask them to describe what it means to be a trusted business advisor, I get some vague comments about putting clients first and always being there to help when clients call. One accountant even pulled out his cell phone and said with pride, “Every one of my clients has my personal cell phone number.” In his mind, that made him a trusted business advisor. In my mind, being available and responsive makes for a good service provider, but it does not necessarily make you a trusted business advisor. In fact, the majority of practitioners I’ve met who think of themselves as a trusted business advisor would be better described as a trusted accounting technician. I’ve selected an excerpt from my book, Firm Forward to illustrate this point .
Let me set up the scene. Newly appointed managing partner, Bennie Stewart has set up a meeting with Jack Marshall. The purpose of the meeting is to convince Jack Marshall, CEO of Star Industries to give the firm another chance after having fired the firm the week before.
__________________
Bennie walked into Jack’s office, breakfast in hand.
“Good Morning, Jack! Thanks again for taking this meeting.”
“Hell, you know I can’t turn down a free breakfast. Seriously, I’m curious to hear what you have to say. My conversation with Tom (the former managing partner) was long on apologies, short on a fumble recovery plan. I’m not promising this will change my mind about moving my work to another firm, but I’m listening.”
“Fair enough, I appreciate that, Jack. I know you told Tom, but would you please tell me what was missing in the relationship.”
“Glad you didn’t ask what was wrong with the work, because there was nothing wrong with the work. You guys are as good as it gets as far as accounting services go. I just feel you could have done more to help us navigate through the recession. No one from the firm picked up the phone or stopped by just to see how we were doing. Any and all conversations were limited to tax and accounting work. I was always the one that initiated the conversation about margins, cash flow, et cetera. In fact, we had a couple of months we had to stretch out accounts payable. The only person from the firm I heard from was your office manager, wondering when we were going to pay. Polite, of course, but it rubbed me the wrong way.
“I appreciate that you still have confidence in our accounting services. I also agree that it isn’t enough anymore. A big part of my job for the next couple years is re-tooling our people and formalizing our advisory services to respond when clients need our help.”
Jack spoke emphatically, “Forgive me, but I’m calling you out on something. I don’t want you to respond when I call, I want you to watch over things, and come to me even before I know there’s a problem. For example, I knew my margins had been slipping for a few months, but it wasn’t until our year-end tax meeting that you even brought it up. Even then, you didn’t say much more than you’d noticed margins had slipped.
“Here’s the point: don’t tell me things I can obviously see in my own profit and loss statement, help me figure out how to fix the problem. Better yet, help me address the issue before it becomes a problem.”
“You’re right. We should be more proactive, and we will be.”
“You guys always sound so smart talking about what has already happened. Any accountant can read the numbers off the statements. Hindsight is 20/20. I don’t just want hindsight. I want you guys looking for the things I’m too busy to see, I want some oversight. I want you to help me plan for the future and keep me on task, progressing toward my goals. I want insight. My executive team regularly reviews our company dashboard – not just looking for what we need to do better. They are always trying to forecast the future performance of the company. I want some foresight, too!”
I made a mental note: hindsight > oversight > insight > foresight.
“I’m going to be really straight with you, Jack. What you’re describing is foreign territory for accountants. Most of us live in a world of certainty, where everything is black or white. The minute we cross over from talking about the past to forecasting the future we enter a world of uncertainty and run the risk of crossing the line of independence. If it sounds like an excuse, I don’t want it to. But it is a reality in the profession that I’m trying to deal with.
“The good news is I’m not the only managing partner with this issue on his plate. The entire profession is rethinking its role with clients for the very reasons you just talked about. Increasingly, our clients want us to act more like an outsourced CFO rather than a traditional accountant. Some would even argue that we need to be more like a CIO – a chief information officer – to offer up better business intelligence.”
“That sounds great to me. What’s wrong with that picture from your perspective?”
“Nothing, really, except the rules governing auditing and independence tend to make us very cautious about stepping over the line.”
“Are you saying that to maintain your status as a CPA firm, you can’t help me run my business? Sounds like you’re working for the banks or the IRS rather than doing what’s best for your clients. Remind me again, who’s paying your bill?”
“True enough.”
“Bennie, you’re not doing such a hot job wooing me back. But you’re also scaring me, because if that’s what every firm is like, I’m no better off moving my business. Maybe I’m trying to buy apples from the butcher, and it just isn’t going to happen.”
“No, I didn’t say that Jack. In fact, what I came to share with you might be just what you’re looking for. A couple years ago, a few of us attended a program on how to develop and deliver advisory services that don’t cross over that line. At the core of that training was what they called ‘Level 5 Service.’ Here, let me show you what it looks like.”
Bennie pulled out the Level 5 graphic and laid it on the table.
Let me set up the scene. Newly appointed managing partner, Bennie Stewart has set up a meeting with Jack Marshall. The purpose of the meeting is to convince Jack Marshall, CEO of Star Industries to give the firm another chance after having fired the firm the week before.
__________________
Bennie walked into Jack’s office, breakfast in hand.
“Good Morning, Jack! Thanks again for taking this meeting.”
“Hell, you know I can’t turn down a free breakfast. Seriously, I’m curious to hear what you have to say. My conversation with Tom (the former managing partner) was long on apologies, short on a fumble recovery plan. I’m not promising this will change my mind about moving my work to another firm, but I’m listening.”
“Fair enough, I appreciate that, Jack. I know you told Tom, but would you please tell me what was missing in the relationship.”
“Glad you didn’t ask what was wrong with the work, because there was nothing wrong with the work. You guys are as good as it gets as far as accounting services go. I just feel you could have done more to help us navigate through the recession. No one from the firm picked up the phone or stopped by just to see how we were doing. Any and all conversations were limited to tax and accounting work. I was always the one that initiated the conversation about margins, cash flow, et cetera. In fact, we had a couple of months we had to stretch out accounts payable. The only person from the firm I heard from was your office manager, wondering when we were going to pay. Polite, of course, but it rubbed me the wrong way.
“I appreciate that you still have confidence in our accounting services. I also agree that it isn’t enough anymore. A big part of my job for the next couple years is re-tooling our people and formalizing our advisory services to respond when clients need our help.”
Jack spoke emphatically, “Forgive me, but I’m calling you out on something. I don’t want you to respond when I call, I want you to watch over things, and come to me even before I know there’s a problem. For example, I knew my margins had been slipping for a few months, but it wasn’t until our year-end tax meeting that you even brought it up. Even then, you didn’t say much more than you’d noticed margins had slipped.
“Here’s the point: don’t tell me things I can obviously see in my own profit and loss statement, help me figure out how to fix the problem. Better yet, help me address the issue before it becomes a problem.”
“You’re right. We should be more proactive, and we will be.”
“You guys always sound so smart talking about what has already happened. Any accountant can read the numbers off the statements. Hindsight is 20/20. I don’t just want hindsight. I want you guys looking for the things I’m too busy to see, I want some oversight. I want you to help me plan for the future and keep me on task, progressing toward my goals. I want insight. My executive team regularly reviews our company dashboard – not just looking for what we need to do better. They are always trying to forecast the future performance of the company. I want some foresight, too!”
I made a mental note: hindsight > oversight > insight > foresight.
“I’m going to be really straight with you, Jack. What you’re describing is foreign territory for accountants. Most of us live in a world of certainty, where everything is black or white. The minute we cross over from talking about the past to forecasting the future we enter a world of uncertainty and run the risk of crossing the line of independence. If it sounds like an excuse, I don’t want it to. But it is a reality in the profession that I’m trying to deal with.
“The good news is I’m not the only managing partner with this issue on his plate. The entire profession is rethinking its role with clients for the very reasons you just talked about. Increasingly, our clients want us to act more like an outsourced CFO rather than a traditional accountant. Some would even argue that we need to be more like a CIO – a chief information officer – to offer up better business intelligence.”
“That sounds great to me. What’s wrong with that picture from your perspective?”
“Nothing, really, except the rules governing auditing and independence tend to make us very cautious about stepping over the line.”
“Are you saying that to maintain your status as a CPA firm, you can’t help me run my business? Sounds like you’re working for the banks or the IRS rather than doing what’s best for your clients. Remind me again, who’s paying your bill?”
“True enough.”
“Bennie, you’re not doing such a hot job wooing me back. But you’re also scaring me, because if that’s what every firm is like, I’m no better off moving my business. Maybe I’m trying to buy apples from the butcher, and it just isn’t going to happen.”
“No, I didn’t say that Jack. In fact, what I came to share with you might be just what you’re looking for. A couple years ago, a few of us attended a program on how to develop and deliver advisory services that don’t cross over that line. At the core of that training was what they called ‘Level 5 Service.’ Here, let me show you what it looks like.”
Bennie pulled out the Level 5 graphic and laid it on the table.
Are you a trusted accounting technician or a trusted business advisor?As Level 1 services become increasingly commoditized, only those who have a structured advisory methodology for moving up the value chain will thrive in the future. Learn more about our comprehensive online Level 5 Certified Advisor training here. |
Jack scanned the document and was quick to comment, “I like it already, Bennie, especially the part about decision support and accuracy vs. relevance. To me, that kind of says it all, right there.”
I dove right in, “Let’s look at the levels.
Level 1 - Technical Foundation
“Once we’ve got Level 1 right, we can move on to Level 2.
Level 2a & 2b - Thorough Analysis
“Clients shouldn’t have to have their accountant play interpreter with their own financial information. Our goal is to make sure our clients can fully comprehend the implications of what shows up on their financial statements.
“Level 2b takes that financial fluency skill and allows you to do some ‘what if’ calculations on the most critical ratios in your business. We have a piece of software that illuminates the cause/effect between seven key business drivers and what shows up on the financial statements. We can even test assumptions of growth and cash demands or stress-test key ratios to see where you’re most vulnerable.”
Jack seemed genuinely frustrated. “I don’t know whether to be mad at you for not showing me this sooner or to feel sorry for the accounting profession. Without something like this, there are a lot of clients like me that are going to be looking for other professionals to rely on. Do you want to be on the compliance side of things or someone I can rely on when times get tough?”
Talking to Jack was proving incredibly productive. I made another mental note: compliance to reliance. “That transition, from compliance to reliance, as you called it, is the journey a lot of accountants are starting to really focus on. And yet –”
“And yet, what? Why weren’t you out pounding on doors during the recession, helping small businesses figure out all this stuff?”
“We should have been. I can’t fix the past. Now, it’s on me to make sure we don’t drop the ball on this going forward.”
“Okay, what happens at Level 3?”
Level 3 - Future Focus
“Okay, now we have a plan, then what?”
Level 4 - Link to Performance
I paused for a moment for Jack to jump in but he didn’t. Either he was totally engrossed or I’d lost him.
“Is this making sense to you?”
“Absolutely. As soon as I finally get over being pissed off that you didn’t come to me sooner, I could really get excited.”
“Should I continue?”
“Of course.”
“Let’s do a quick re-cap:
“Level 1 is the technical foundation for precision decision-making. We have to get this part right. And not just from the IRS’ perspective, but within the context of your big picture goals.
“Level 2 is all about insight and financial fluency for you and your team. Then, we do those what-ifs to uncover hidden opportunities and create direct linkages between key business drivers and financial outcomes.
“Level 3 is the relevance piece. There’s this saying: People who aim at nothing, hit it with amazing accuracy. We have to have a clear vision of where you want to go and how you plan to get there. Knowing where you want to be in the future also helps us with tax planning at Level 1.
“Level 4 creates the links between behaviors and company outcomes. It’s about providing line of sight performance feedback for everyone on the team via custom dashboards and departmental P&Ls.
Level 5 -Continuous Improvement
“As market conditions change or your goals and strategies get adjusted, we end up developing new measures or realigning the ones we have to provide the decision support you need to run the company more effectively.”
“How many of these Level 5 engagements have you done?”
“Zero. Bottom line, we dropped the ball. As a result, we’ve continued to do what we’ve always done, ‘random acts of consulting’ that feel good in the short term but never get us any closer to a formalized consulting methodology we can roll out to all of our clients. Which is what you were asking for and, frankly, deserved.
“Now, one of our best clients has fired us because we didn’t pay attention to his needs beyond the accounting side of things. I’m embarrassed to admit all this, but I can’t pretend we did everything possible to meet your needs. I didn’t want to look foolish in bringing this to you until we could do the process right. I was wrong. I should have.”
“I appreciate your honesty, Bennie. I wouldn’t have cared if you didn’t get it perfect. We were really struggling with the recession and would have welcomed any help you could have offered, perfect or not.”
“You’re right. Being perfect is a dangerous and slippery slope. I’ve come around to valuing ‘progress over perfection’ because what really matters is that we have to start somewhere.”
“Start here. Start now.”
To read the rest of the story go to www.amazon.com to order your copy today! If you've already read the book, please be sure to provide feedback on amazon.com. Thank you!
__________________
Jack Marshall, like most business owners, instinctively recognize they need more from their accountant, but often times they don’t know what to ask for. Bennie is like most accountants who want to be doing more, but lack formalized processes to proactively address the greater needs of their clients. The Level 5 Service framework provides a repeatable, leveragable advisory methodology that is universally applicable to all businesses. At the same time, it can be tailored to the specific needs of each client.
Whether you adopt the Level 5 Service methodology or you have one of your own, the path from trusted accounting technician to trusted business advisor must be a value-adding journey; a journey from Hindsight to Oversight to Insight to Foresight.
To be a true trusted business advisor, practitioners must move up the value chain from:
I dove right in, “Let’s look at the levels.
Level 1 - Technical Foundation
- Write-up
- Accounting
- Tax Return
- Audit - Review
“Once we’ve got Level 1 right, we can move on to Level 2.
Level 2a & 2b - Thorough Analysis
- Level 2a: Financial Fluency - Analyze & Educate clients about Critical Ratios
- Level 2b: Conduct What If scenarios
“Clients shouldn’t have to have their accountant play interpreter with their own financial information. Our goal is to make sure our clients can fully comprehend the implications of what shows up on their financial statements.
“Level 2b takes that financial fluency skill and allows you to do some ‘what if’ calculations on the most critical ratios in your business. We have a piece of software that illuminates the cause/effect between seven key business drivers and what shows up on the financial statements. We can even test assumptions of growth and cash demands or stress-test key ratios to see where you’re most vulnerable.”
Jack seemed genuinely frustrated. “I don’t know whether to be mad at you for not showing me this sooner or to feel sorry for the accounting profession. Without something like this, there are a lot of clients like me that are going to be looking for other professionals to rely on. Do you want to be on the compliance side of things or someone I can rely on when times get tough?”
Talking to Jack was proving incredibly productive. I made another mental note: compliance to reliance. “That transition, from compliance to reliance, as you called it, is the journey a lot of accountants are starting to really focus on. And yet –”
“And yet, what? Why weren’t you out pounding on doors during the recession, helping small businesses figure out all this stuff?”
“We should have been. I can’t fix the past. Now, it’s on me to make sure we don’t drop the ball on this going forward.”
“Okay, what happens at Level 3?”
Level 3 - Future Focus
- • Level 3a: Discovery—establishing current state
• Level 3b: Planning—roadmap to the future
“Okay, now we have a plan, then what?”
Level 4 - Link to Performance
- Link financial goals with business activities
- Measure /report outcomes of business activities via dashboards
I paused for a moment for Jack to jump in but he didn’t. Either he was totally engrossed or I’d lost him.
“Is this making sense to you?”
“Absolutely. As soon as I finally get over being pissed off that you didn’t come to me sooner, I could really get excited.”
“Should I continue?”
“Of course.”
“Let’s do a quick re-cap:
“Level 1 is the technical foundation for precision decision-making. We have to get this part right. And not just from the IRS’ perspective, but within the context of your big picture goals.
“Level 2 is all about insight and financial fluency for you and your team. Then, we do those what-ifs to uncover hidden opportunities and create direct linkages between key business drivers and financial outcomes.
“Level 3 is the relevance piece. There’s this saying: People who aim at nothing, hit it with amazing accuracy. We have to have a clear vision of where you want to go and how you plan to get there. Knowing where you want to be in the future also helps us with tax planning at Level 1.
“Level 4 creates the links between behaviors and company outcomes. It’s about providing line of sight performance feedback for everyone on the team via custom dashboards and departmental P&Ls.
Level 5 -Continuous Improvement
- Help clients monitor critical activities and strategically manage business activities
“As market conditions change or your goals and strategies get adjusted, we end up developing new measures or realigning the ones we have to provide the decision support you need to run the company more effectively.”
“How many of these Level 5 engagements have you done?”
“Zero. Bottom line, we dropped the ball. As a result, we’ve continued to do what we’ve always done, ‘random acts of consulting’ that feel good in the short term but never get us any closer to a formalized consulting methodology we can roll out to all of our clients. Which is what you were asking for and, frankly, deserved.
“Now, one of our best clients has fired us because we didn’t pay attention to his needs beyond the accounting side of things. I’m embarrassed to admit all this, but I can’t pretend we did everything possible to meet your needs. I didn’t want to look foolish in bringing this to you until we could do the process right. I was wrong. I should have.”
“I appreciate your honesty, Bennie. I wouldn’t have cared if you didn’t get it perfect. We were really struggling with the recession and would have welcomed any help you could have offered, perfect or not.”
“You’re right. Being perfect is a dangerous and slippery slope. I’ve come around to valuing ‘progress over perfection’ because what really matters is that we have to start somewhere.”
“Start here. Start now.”
To read the rest of the story go to www.amazon.com to order your copy today! If you've already read the book, please be sure to provide feedback on amazon.com. Thank you!
__________________
Jack Marshall, like most business owners, instinctively recognize they need more from their accountant, but often times they don’t know what to ask for. Bennie is like most accountants who want to be doing more, but lack formalized processes to proactively address the greater needs of their clients. The Level 5 Service framework provides a repeatable, leveragable advisory methodology that is universally applicable to all businesses. At the same time, it can be tailored to the specific needs of each client.
Whether you adopt the Level 5 Service methodology or you have one of your own, the path from trusted accounting technician to trusted business advisor must be a value-adding journey; a journey from Hindsight to Oversight to Insight to Foresight.
To be a true trusted business advisor, practitioners must move up the value chain from:
- Being focused on delivering historical Hindsight (a.k.a. financial statements),
- To providing technology-enabled (cloud, mobile), real-time financial Oversight,
- To delivering value adding Insight (business intelligence),
- As well as, mission critical Foresight (decision support).