The Proactive Manager – Focus on Compliance or Advice?

As accounting firms move from a dominant focus on compliance in the work they do with clients to a focus on both compliance and advisory skills, the role of manager has never been more critical.

Two types of managers are evolving in public practice, the first with the experience and ability to manage compliance work efficiently and the second with the desire and interest to transition to a stronger advisory focus. Both roles are extremely important in progressive accounting firms.

Are your managers more suited to compliance or advisory work? What are you doing to develop their skills and capabilities to take on these increasingly specialised roles?

The case for compliance managers

The role of the compliance manager is to take on responsibility for all compliance work associated with the clients assigned to them. They utilise both internal and external resources as required for the collection and processing of data. They are responsible for the preliminary and often final review of completed work. They engage with clients and their people throughout this process to ensure that work is completed in a professional and efficient manner.

With the increasing commoditisation of compliance work, it’s essential that this work is completed in as efficient a manner as possible. The senior partner of an accounting firm recently told me that compliance work is no longer profitable. Do you believe this to be the case in your firm? A properly trained and experienced compliance manager can help ensure that senior advisory staff are freed up to focus on advisory work with clients.

Key responsibilities of a compliance manager should include:

  1. Client relationships at a compliance level (and clients need to know this)
  2. Allocation of workflow (collection and processing of data) to internal and outsourced staff
  3. Engagement of clients at a compliance level (determining the scope of work and fee for service)
  4. Management of WIP budgets and fees for these clients (in association with advisory managers)
  5. Critical review of client financial needs to identify opportunities to add value at an advisory level

In essence, these responsibilities encompass what partners (and principals) of firms used to be responsible for in the past (and some still retain this responsibility now). As a partner, you simply cannot afford to manage compliance work without pricing the work beyond market rates or accepting write-offs on compliance work that will (hopefully) be overcome with (extra value) advisory work. The challenge with this is that many firms still struggle to charge an appropriate fee for advisory services, resulting in an accelerated loss of profitability.

I’ve come across many firms (in fact most) where principals and partners comment that ‘my managers and senior accountants are simply not stepping up to take more responsibility for clients and workflow.’ However, closer examination often reveals a reluctance to delegate any significant responsibility for the fear of losing clients or providing bad advice. By allocating responsibility and establishing strong internal systems that say ‘this is the way we do things here,’ most of these concerns can be overcome. And the proof lies with accountants who appeared unable to take on responsibility with one firm, but did so with another firm with stronger processes that gave them the opportunity to grow.

The case for advisory managers

The role of the advisory manager is to work with the partner to identify and implement client advisory projects. Without the support of the advisory manager, the partner quickly finds that their capacity is filled up with ad hoc advisory work and they simply have no additional capacity to focus on business development and high-level strategic work. The advisory manager also liaises with the compliance manager in relation to completed accounts and financial statements.

At the present time, it appears that, based on national survey results, many accounting firms struggle to increase their advisory work beyond 20% of total firm revenue. This is due more to lack of capacity than lack of opportunities for growth, in most cases. And lack of capacity inevitably results from lack of leverage of time at a senior level of the firm. Once principals and partners feel comfortable in delegating responsibility for workflow and client relationships to the people around them, they have more time to focus on what clients really want from their professional and trusted advisor.

Key responsibilities of an advisory manager should include:

  1. Client relationships at an advisory level (perhaps the lower level advisory relationships that the partner or principal has no time to consider)
  2. Day to day management of work associated with ongoing advisory projects including KPI analysis, benchmarking reports, management reports, client financial health checks and reviews and financial forecasting.
  3. Day to day engagement with clients at an advisory level (following up requests for information)
  4. Management of WIP budgets associated with advisory work
  5. Communication with the compliance team in relation to reports required for advisory services

In many cases, the advisory manager will be a career progression from compliance manager. However, in some cases, it becomes clear pretty quickly that some managers (and senior accountants) have the motivated ability to engage directly with clients. In some cases, they do this better than the partners that they work for, they simply lack the experience to provide high-level technical advice.

So, what does the future of the manager look like?

I understand that it’s difficult to delegate responsibilities to people who simply appear unmotivated to take on these responsibilities or lack the technical experience or capability to give the advice required. The secret is to establish the strengths (and weaknesses) of your senior accountants and managers and help them develop a professional path that will maximise their potential. In some cases, they will run ahead of you, in other cases they will resist your approaches. In most cases, it’s simply a matter of asking the right questions, listening and coaching your people to achieve their best. Whilst it’s true that motivation comes from within, the right leadership and coaching environment will help bring out the best in your people.

Your next steps

  1. Tell your team about your vision for the future of your business. Talk about the mix of advisory and compliance work. Explain what clients really need (and want) from their trusted advisors.
  2. Explain the roles of compliance and advisory manager. Confirm that both are required within your firm, however the firm won’t grow without both types of managers.
  3. Give your managers the opportunity to nominate their development pathway and provide the resources and encouragement to help them achieve their goals.
  4. Put in place firm-wide systems and procedures to manage client relationships and workflow in a leveraged way. Often the real roadblocks here lie with partners who will not let go.
  5. Identify the ‘keepers’ in your firm as early as possible in their professional development and give them every opportunity to fly.

If you’re a manager who’s frustrated because you don’t have these opportunities, then you have 2 choices. Start by engaging senior staff with your vision of the future of the industry and your role in that future. Look for every opportunity to take responsibility for clients and workflow, don’t wait for it to be handed to you. If this doesn’t work, then another firm may be the best choice for you. However, you should recognise that sometimes a new environment is not the answer. Perhaps you’re simply not coaching the partner or principal of your firm!

 

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Dale Crosby

Dale Crosby

Director | Senior Consultant & Facilitator at For Accountants | High Tech Soft Touch
Dale Crosby specialises in change management and has a specific interest in client ommunication and integration of compliance, business advisory and financial advisory services within accounting firms. He has worked closely with accounting firms throughout Australia and New Zealand over the past 15 years.
Dale Crosby

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Dale Crosby

Dale Crosby specialises in change management and has a specific interest in client ommunication and integration of compliance, business advisory and financial advisory services within accounting firms. He has worked closely with accounting firms throughout Australia and New Zealand over the past 15 years.