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How to advise clients on their finances


Why do people hire consultants? Maybe they don’t want to reinvent the wheel. Maybe they want to avoid the trial and error approach. But the most important reason is that the experience is valuable. People want to learn from an expert. And, generally speaking, people will take advice when they pay for it. As an accountant, you are able to offer your clients valuable investment advice; the challenge may be to make them pay for it.

How can you help individual customers?

Most of the advice you can offer is about financial planning. The value you bring to the table is based on your objectivity. You are a trustee selling a roadmap. The customer chooses the car to make the trip.

Retirement planning: Few people are well prepared for retirement. A major objective is to enable growth in a deferred tax environment while controlling administrative costs and costs. Many people who provide retirement planning services also sell insurance or investment products. Think of it like going to a car dealership to buy your roadmap.

College funding: Basically, it’s about putting money aside to grow in a low-tax environment. There is also the broader issue of covering the full cost through loans, grants, scholarships and other incentives. It is also worth considering whether a college education is the best choice for the client’s child. Funding colleges is a major expense that clients often overlook.

Caring for elderly parents: Many clients find themselves “sandwiched” between raising their children and caring for aging parents. Both are a drain on finances. Solutions may include downsizing, moving aging parents to retirement communities, and paying for adequate health care. Accountants can be particularly helpful in this area.

Divorce or death of spouse: Either situation can put your client in a vulnerable state, surrounded by people wanting to make money on them. They risk making the wrong decisions and trusting the wrong person for advice. As an accountant, you are their paid trustee and can give them objective advice.

Budgeting: Many people need help figuring out how to budget. Some of them even go into debt when they are not saving for the future and have no emergency funds. As an accountant, you understand their personal finances and have first-hand knowledge of their checking account and brokerage records. You can help them budget, pay off debt, and keep track of their spending.

Long term care: Unfortunately, most people will need long-term care towards the end of their life. Many people mistakenly believe that Medicare will pay for long-term nursing home care while still allowing them to keep their substantial assets intact. However, Medicare only pays for long-term care if the person has first nearly depleted their own assets. Customers need a plan when they can no longer take care of themselves. Although some clients have children who will take them home or pay for their nursing home expenses, they still need a Plan B.

How can you help your professional clients?

Business owners often have the bulk of their wealth tied to their business. While some are successful, many struggle to stay afloat. These clients often need help, but don’t know where to turn. While a banker can be a useful resource, when a client is having financial difficulty, they may not want to share certain information with their primary lender. Here are some ways you can help.

Reduce overheads: You can see where their money is going and what they are paying to service providers and help them renegotiate better deals or switch to other providers. If their business owns property, they might be able to challenge the tax assessment. If they are renting out their premises, you could help them renegotiate the lease or help them find another space.

Improve cash flow: Every business has slow payers. Some have “no payers”. You can help them stay on top of old debts and pursue them. You can help them rethink their payment terms to encourage prepayments and penalize late payments.

Sell ​​the business: You can help them prepare the business for sale. It’s like a coach preparing an athlete for a major competition. The business must be in optimal physical and financial shape. Keep in mind that this often has a long lead time.

Buy another business: Your client may be considering expansion. One strategy is to buy an existing business. Often the most valuable asset is the customer base that provides the source of income. You can help your customer get an objective assessment of the existing business and design a purchase contract that protects your customer.

Debt reduction and cost of carrying debt: Many businesses owe money. They maintain a line of credit to smooth unequal income cycles. Small businesses can end up with credit card balances at high interest rates. You can advise them on paying off debt when things are going well and ongoing debt consolidation at lower interest rates.

Purchasing partners: Sometimes partners die and their heirs inherit their share of the business. Often the owner wants to buy them back and the family prefers cash to equity. You can help business owners plan ahead with strategies such as purchasing key person insurance, which pays off when the life insured dies.

How can you get them to pay for advice?

The first step is to establish yourself as an expert. When advising individuals, the Certified Financial Planner (CFP) designation is a good strategy. The accounting profession has several other relevant professional certifications.

It also makes sense to pack advice. For individuals, financial planning can easily be sold as a packaged service. There is a lot of software that produces attractive reports. This is a complete solution that you can offer for a specific price.

Addressing individual scenarios can be a stand-alone service (a good choice for businesses) or a supplement as a follow-up to the individual financial plan. Customers can be billed at a flat rate per project or billed based on the billable time required.

Either way, you need an initial investigation session to learn the extent of the problem and the customer’s issues. You will also need supporting documents. The data collection component of the service can be free or integrated with final report pricing, with prioritized action steps. You will need to develop a system to solve each problem and a report format to present your advice.

The advantage you bring to the table is your objectivity. You can come up with a solution without trying to sell a product. You provide advice based on experience, which is invaluable.


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