I am encouraged by the recent research from the Prudential that states that the added complexity of the new pension freedoms increases the need for accountants and financial advice firms to work in partnership. The research reveals that some nine out of 10 advisers are likely to work more closely with accountants over the next two years.
The financial services sector is more focused on removing risk from the advice process and joint ventures offer an increasingly relevant solution with good financial rewards for all concerned. There is burgeoning demand from consumers and businesses for an holistic approach to financial planning resulting in an acceleration of accountancy, law and financial advisory firms as well as property and claims management companies offering joined-up and overlapping services. More and more, these services are being bundled together in the eyes of the customer.
This trend is paving the way for when joint ventures supersede the in-house financial services model. It does not make sense not to think outside the box of our traditional business models. A reluctance to look beyond the transactional business model and investigate clients’ wider needs represents a narrow-minded approach, and potentially, vulnerability within a business.
Accountancy and financial advice is fundamental to business and accountants provide essential financial information and advice to organisations of all types and sizes. It is my view that that most of the alternative business structures which, ultimately, will give rise to multi-disciplinary practices, will be accountancy-led. I expect joint ventures between accountants and financial advisers to proliferate. Increasingly, inheritance tax and legacy planning require the collaboration of the accountant and the financial planner. Pension reforms and bespoke trust arrangements make intricate tax advice all the more critical, notwithstanding that tax is a particularly pertinent issue for all business owners, especially those who wish to sell up.
Making sure the joint venture is exactly right is paramount. The first of two important pieces of advice I can offer is that businesses must be clear about how they will market and supply the very best of their complementary specialisations. After all, the purpose of a joint venture must be to improve services to clients by allowing each party to play to its mutual strengths. Careful management of their respective databases will lead to effective cross-selling.
Second, remember that bringing complementary but different businesses together will have its challenges as well as rewards. Due diligence is vital before a formal relationship commences, ideally following a trial period of working together. There needs to be personal rapport between the teams and a clear commitment by the leaders of the businesses. Joint ventures are 50/50 owned and there is no place for firms which operate as a collection of disparate practitioners. Only cohesive businesses will win through.