Accountants are great with numbers.
They are fantastic with internal numbers for their business.
Everything from average hourly rate their team is charging to productivity to WIP.
As Business Owners Accountants understand the value of knowing the numbers and the saying what gets measured gets managed.
But do Accountants know what the numbers look like for a successful and profitable Financial Planning business within an Accounting Firm?
Just like the numbers in an Accounting firm, these can be measured and managed.
I can show you how you can create a $1M Financial Planning business in your Accounting firm.
Business Fitness recently released its annual report – the Good the Bad and the Ugly which looks at the state of Accounting Firms in Australia. The numbers, the team the productivity.
They stated the average firm in Australia has 2 Partners and generates just over $2,000,000 in revenue.
Therefore, for this example, I am going to use these averages to demonstrate how an Accounting firm can create a $1M Financial Planning business.
To start, let’s take a look at the current Accounting Firms Numbers:
As I mentioned, Business Fitnesses report tells us this is the average type of firm across Australia.
Now, let’s take a look at the rollout of the Financial Planning offer to the Accounting clients.
In my opinion, this is often done really poorly (no launch celebration, no clear offer, no structured Financial Planning Product), which leads to a poor result and lack of engagement with Financial Planning from Accounting clients.
In the coming weeks I will provide more on how to ensure your launch or relaunch of your Financial Planning Business is successful and how to provide a really valuable Financial Planning product.
For now, let’s take a look at the numbers:
The Financial Planning upfront fee is a fee charged to provide a full service Financial Planning offer (we charge more in our Financial Planning business – but you get the idea). This fee is charged either upfront or over 12 months with the work being done over a 12 month period.
The take up of Financial Planning is a number based on our actual experience in our firm over 8 years.
Next, we need to look at the referrals that are received. Referrals to professional service firms are gold as they normally lead to secure business without the issue of having to sell the client. In this instance, the numbers are lower than what we have seen in our business, but provide an accurate picture.
Once the client has gone through a first year Financial Planning product, you want to have a structured advice package to continue their relationship.
Gone are the days when you just put a client into a product that provided an recurring ‘trail’ fee. You need a fee for service advice based product that the client values. More on that in the future.
For now, let’s look at the numbers when you add in a second year (and beyond) annual advice product fee.
A good Financial Planning business will not only stand on its own two feet financially, but it will generate fee revenue for the Accounting firm. This is primarily done in the form of Self Managed Super Fund (SMSF) upfront set up and ongoing administration fees to the Accounting firm.
Not all Financial Planning clients will need or be ready for a SMSF, however, with a mature Accounting firm client base, there will naturally be opportunities.
In this instance, I have looked at the take up of new SMSF set up, however, most Accounting firms will have a few SMSF in their client base, so these numbers may be a little different.
What does this all look like?
Combine the new Financial Planning business numbers with the new SMSF fees for the Accounting firm, and its starting to look very nice indeed.
To finish, let’s now take a look at the revenue per partner in the Accounting firm.
There will of course be a Financial Planner in the FInancial Planning business and the Accounting firm may or may not choose to offer this Financial Planner equity in the business (more on that later) but for now, let’s take it that the Accounting Partners own 100% of the Financial Planning business.
How you can create a $1M Financial Planning Business in an Accounting firm.
There are the numbers.
They may be different in your business.
However, the opportunity exists for all Accounting Partners to explore how a successful and profitable Financial Planning business in their Accounting firm will make a real difference to their firms overall revenue, profit and indeed business valuation.
This can only be a good thing as more profit leads to more opportunities, freedom and the chance to make a real difference in your life and your community.
Who wouldn’t want that?
What’s stopping you?
Accounting Partners, if you want to see what the numbers look like in your firm, reach out and we can have a chat
Coming up, we are running a series of webinars on the 6 steps you need to create a $1M Financial Planning business.