The rise of the product specialists and what it could mean for CPD

There’s a growing trend for accountants to set themselves up as specialists – and not just in the traditional area of tax.

Once upon a time, if an accounting firm sought to branch out and add a new service, it would usually find a way to specialise in tax, whether by hiring, acquiring, or partnering.

As firm’s strive to become one-stop shops for their clients, we’re seeing greater diversification in the services and specialisms on offer.

The most obvious is business advisory, whereby accountants advise clients on growth strategy, digitalisation, restructuring, or whatever’s asked for. But we’re increasingly seeing more specialist fields, such as wealth management or estate planning, in the service lists of small to medium size practices. This has implications not just for businesses but for individual accountants’ CPD and career choices.

Why specialise?

There are many reasons why a firm might consider adding services and specialisms — new business, strengthening client relationships, preservation, sink or swim.

Perhaps the most clear cut is that it often makes business sense. Accountants are trusted advisers, often with years of experience and a deep knowledge of a client’s business, so who better to advise them?

“Some clients think the world of their accountants. If I say jump and explain why, they’ll certainly consider jumping. Most accountants offer advice because it’s in the client’s best interest,” says Gordon Gilchrist, a consultant at 2020 Innovation.

For AAT council member David Frederick (pictured), Managing Partner at Marcus Bishop Associates, the decision to specialise in estate planning was to strengthen client relationships, but it also turned into a new business driver. “Amid the process of digitising all our historical data, I noticed that many of our clients were ageing. So I figured we needed to offer them additional services.”

Frederick’s decision has paid dividends, with estate planning going from strength to strength. “We now provide other accounting firms and some law firms with our probate, wills and Lasting Powers of Attorney (LPA) services. Many accountants don’t provide such services. They’ll say it’s not what they trained for, which is probably true, our training is very technical, very narrow. But to service the clients of tomorrow and today, you need to think beyond yesterday’s learning.”

Norman Younger of Maximiti is clear on why a practice might look to specialise, especially if it requires undertaking new qualifications — to attract new business. As someone who did a course to add dispute mediation to his repertoire, he understands the motivations, as well as the effort required and opportunities.

“The bottom line for a practitioner to consider going on a course is ‘will it cut the mustard and attract new clients,” he says. “And would you be confident shouting about it in the golf club?”

Younger also notes a defensive element. “There is definitely the perception that practices need to specialise as there are no barriers to entry to offering routine accountancy work. ‘Accountant’ isn’t term protected like, for example, solicitor.”

How to do it — individuals

Looking at it first from an individual perspective, Mark Perrin, a Partner specialising in strategic business advisory at Menzies, was an AAT prize winner back in the 80s. AAT gave him a good start from where he went on to become a chartered accountant, along the way gaining experience in accounts, audit and tax, and building a good range of knowledge and experience in various sectors and businesses.

But it was working for and with entrepreneurs that grew his desire to get into advisory. “Interacting with entrepreneurs, asking them questions, getting them to think differently, seeing that you’re making a difference to their business, you notice a real spark in energy, and it really gave me the appetite to want to work in advisory.”

Perrin developed his mindset and skillset, something which evolved over time. And while he went on courses internally and externally, it was predominantly his interactions with businesses that provided his learning, as well as his track record. “I started interacting with businesses in a different way, challenging them about the future, and I evolved skills in this way. I’ve been working like this for a long time now. I’ve come from a traditional accounting background and gained a lot of experience working with businesses in an advisory mindset.”

How to do it — firms

How a firm goes about specialising really depends on size, resources and the target specialism. For small firms a partnership with a local specialist is well proven.

“A sole practitioner can’t afford to simply go off and buy an expert, not least because they don’t have enough clients yet. To make it worth anybody’s while, you have to have enough critical mass to need a VAT consultant, or a corporate finance consultant, or an insolvency practitioner. These are areas where smaller firms hook up with a local firm, preferably another accountant, because they hold their knife and fork the same way, they understand that if I give you one of my clients who wants to sell out and you are a corporate finance expert, you’ll take care of my client without asking for the accounts and the tax return, although you could, you probably wouldn’t,” says Gilchrist.

For Gilchrist, there’s a specialism sweet spot from where firms can really begin to branch out into additional services: combining good use of cloud accounting software to not only do compliance work, but also to support business advisory to a client base in a specific sector.

“Let’s say for example you specialise in dentists. You help them make more money; when they make more money, you help them save more tax; then you help them with their wealth management and longer-term financial independence, and so on,” he says.

This is where hiring, partnering with or acquiring a local specialist comes into play. Especially for a specialism like wealth management, which is regulated, you need financial planners. For accountants to be able to perform a wealth management role, it would be a career change not a new skill.

Developing in-house is doable, but it can be very resource demanding — money and time — which few practice owners, especially smaller or newer ones, can afford. So the partnering route is likely the most quickly achievable, it shares risk and is proven to work.

“Small firms have to build it up slowly. If you’re a big firm of a million pound turnover and hundreds of large clients who need a certain service, you take £50,000, hire someone and you’ll get it back. But not when you’re doing £150,000 a year in fees, with only one or two clients who might benefit from the new service. It’s hard. It needs investment,” says Younger.

Proving you’re bonafide

Accountants are unlikely to be able to learn new skills in a hurry, continues Younger. “I’m trained as a mediator. I went on an intense and expensive course, so it is feasible, but getting business off it is much harder. At the time of the course, I had 15 years experience dealing with situations, but I didn’t have a qualification to put in front of my name. So for me it’s a combination of experience and the qualification. I’ve seen an uptake because of the qualification, the letters after my name make a difference. But experience is the one key barrier. You can’t buy experience or do a course in it.”

Frederick also notes another barrier being recognition, with the public, businesses and some institutions not recognising that accountants perform certain specialisms, in his case probate.

“Clients never concern themselves with letters after the name, which is a problem that leads to a whole can of worms, hence AAT’s Accountable campaign to safeguard the term accountant and the work that we do. So I think we need to be able to signify that we have a strength, or a specialism. For example, there are even some in the finance industry that don’t understand that accountants do probate. And some clients don’t understand, because historically probate has been provided by lawyers.

“It’ll take time before the word spreads through the marketplace, so having things like digital badges and recognition for CPD would be a good start. It’ll help members to market themselves in social media and on their websites. Anything that helps raise their profile in the competitive noise can only be a good thing. I think it would be a great thing for AAT too because it would raise our brand and our profile.”

Neil Johnson is a freelance business journalist who contributes regularly to trade publications and member organisations, covering employability, recruitment, business trends and industrial analysis.