Grant Bloxham

Slowing growth from compliance fees and profit margins are the number one business concern for public practice accountants, according to the Bstar 2015 Accountants Research Report, presented by Perpetual.

Practice valuation business cap rates decreased by 14.6 per cent in 2014, which is the biggest decline in the past four years.

Also topping the concerns list are capacity and time constraints and the fee mix from compliance and advice services.

What has changed most from Bstar’s 2014 Accountants Research Report is the impact these concerns are having on practice management and ownership succession, with partners now ready to take action.

“Partners approaching succession and retirement are worrying about the future performance and value of their practice,” Grant Bloxham, Bstar CEO said.

“Succession has moved from a strategic concern, to a high ‘need to act’ operational concern, yet more than two thirds (69 per cent) do not have a formal succession plan in place.”

With accountants identifying the future of their growth is in advice services, the concern about time suggests they realise they need to improve practice management to create capacity for advice services. Similarly, the transition from a compliance to an advice service business model presents new challenges.

“The industry is changing and the threats facing the accounting profession in 2015 are very different to the common challenges accountants have had to face over the years, such as technology gaps in relation to systemising processes for client compliance advice,” Mr Bloxham said.

The top five strategic threats identified in the research are:

• government regulation
• technology
• changing client loyalties
• shifting demographics
• increased competition.

The removal of the AFSL accountant’s exemption in July 2016 is most one of the most significant changes to the industry in recent history.

Mark Smith, Group Executive Perpetual Private, which works with accountants to provide solutions to this issue, said it has left many accountants questioning the best way forward for their business.

“In the same way that declining fee growth rate and profit margins are big concerns for accountants, so is the decision they need to make about their futures,” Mr Smith said.

“Many accountants value their independence and so do their clients and as such they’re keen to maintain it. Perpetual Private understands this and offers licensing support to help them continue to operate independently, while running a compliant business and meeting the advice needs of their clients.”

Planning and resourcing the implementation of advice services is a key way to help accountants grow and improve the value of their practice.

“There are important differences between advice services and leveraged advice services,” Mr Bloxham said.

“The accounting practices which are most successful are those that are building leveraged advice services by separating strategic and operational advisory and support services. It is these new leveraged advice services which will provide them with new opportunities to replace disappearing compliance work.”

The Bstar 2015 Accountants Research Report is based on more than 175 face-to-face strategic interviews with principals of accounting and financial planning firms.

The post Research reveals declining fee growth rates and profit margins are accountants’ biggest worry appeared first on AdviserVoice.