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- Making the Leap from Compliance to Advisory with Practice Forward
Friedman & Huey: Making the leap from compliance to advisory
See why this large firm chose Practice Forward
How a large-sized firm – Friedman & Huey – uses Thomson Reuters Practice Forward to offer enhanced services and a more valuable future-facing relationship with its clients
Louis DeLuca, CPA, MST is a partner with Friedman & Huey Associates. With 70 practitioners in three Chicago area locations, he shares what led his firm to position itself for a more profitable relationship with its clients by establishing a role as an advisor.
Understanding the “why,” but looking for “how” to grow
Although the firm’s ongoing business with a large focus on tax compliance was healthy and established, there was a desire to grow into a new, larger role for clients. “We knew we needed to head to more of an advisory role with our clients and we needed to do it quickly, but we were not sure how to get started,” says DeLuca.
While the firm wanted to take on the more valuable role of serving as an advisor for its clients, framing that opportunity in a conversation often proved difficult. With existing relationships often focused on compliance issues, there was not always a natural opening to present the benefits of having Friedman & Huey serve as a trusted advisor. By offering more advisory services, it would increase the value of their relationship by helping their clients achieve greater success. The firm would also be more profitable by establishing pricing for services that would be better aligned with the value they bring to clients.
Friedman & Huey’s solution was discovered when DeLuca spoke with practitioners from other firms while attending the Thomson Reuters SYNERGY users’ conference. His professional colleagues provided their own testimony to the power of Practice Forward, which was the catalyst for successfully growing their firms into the field of advisory. It was exactly the solution Friedman & Huey had been seeking.
Today, Practice Forward is serving as a transformative tool for Friedman & Huey, providing the firm a means to open the doors to advisory and enter deeper, consultative conversations.
“It draws the line as to what services will be provided within an engagement, everything else outside of scope becomes an advisory offering,” says DeLuca. “It eases the transition into an advisory role with clients when you didn’t know how to start in the past. Advisory engagements often include what we normally did in the past, we were not recognizing and pricing properly for those services.”
Large firms can set scope, define benefits of advisory services
By being able to set scope and present a clear, focused view of exactly what the firm is able to provide, Practice Forward can guide firms to look beyond maintenance services such as tax preparation, accounting/ bookkeeping and payroll, and toward more focus on lucrative, value-added services such as business advising, strategic/planning, business best practices, income strategies, and more.
Practice Forward established a uniform method of offering advisory services and involving the entire firm with embracing available opportunities in that space. As a large firm with a focus on compliance work, Friedman & Huey benefited from increasing revenue through new services — and their clients gained the strategic advice they had been seeking.
By following the Practice Forward learning model, which includes individual sessions with a dedicated Advisory Consultant, the firm is learning to better separate maintenance roles from advisory. This establishes formalized compensation for a firm’s knowledge and skills by bundling value with advisory, rather than simply giving it away.
“Practice Forward brought the advisory conversation to the forefront for us. We’ve been talking about it for a while, and Practice Forward provided us with the tools to shift in that direction and do it quickly,” says DeLuca.
Practice Forward serves as an organized, proven method of initiating the conversation of advisory services and following through with the tools to deliver results. Firms now have a natural mechanism for offering their knowledge and insights for making their customers’ businesses more profitable. These deeper client relationships lead firms to increased revenue.
Changing the tone of client conversation from compliance to advisory
DeLuca says he has noticed, in general, that some practitioners have the natural ability to direct a conversation toward advisory services, while some are challenged with even finding an opening to talk about advisory.
“In most of our previous interactions with clients, we were generally focused heavily on their compliance work,” says DeLuca, noting the amount of effort involved with positioning the firm as a trusted advisor.
“Practice Forward laid out what needs to happen to get these good conversations started with clients.”
Practice Forward does more than simply open doors. With it comes content and tools, coaching, consulting, and other concrete methods for practitioners, allowing them to become comfortable developing and maintaining this enhanced relationship with clients.
Instead of mostly looking back at compliance, the opportunity to look ahead with a focus on advisory is nurtured.
“We needed to be more forward-looking and forward-thinking, and asking the right questions to help clients going forward, not just sending them a bill for something that happened in the past,” explains DeLuca.
Eliminating a client’s desire to simply shop based on prices comes from presenting solutions and a bottom- line advantage to using the firm’s advisory services. This makes Friedman & Huey’s expertise even more valuable and necessary to its clients.
Developing a different standard for revenue
A new approach focuses on creating revenue growth for years to come by placing a value on the specialized services the firm provides.
“The minimum pricing tool, along with the client fee calculator, has forced us to price new work uniformly,” says DeLuca, noting it has helped filter out lower-impact prospective clients who may be overly focused on price instead of the real value derived from advisory services. “We made large strides into taking on more profitable work and walking away from the clients that would not value services – and were most likely going to burn up our resources. That not only helps our firm’s profitability, but it also gives us the capacity to be more effective for other clients.”
In the past, Friedman & Huey would consider accepting most clients because, “This client may grow into something bigger,” says DeLuca. The result of doing that, he explained, would be allocating too much time to serve a less-profitable segment of clientele.
“With Practice Forward’s minimum pricing structure, we are able to make a good business decision on whether or not to accept a new client.”
Taking the time to find answers, nurture opportunities
Practice Forward not only challenges the way firms hold conversations with their clients, but it also sets in motion access to expanded services that generate increased revenue. And also, it gives younger staff members confidence, allowing them time to assess a client’s questions and needs without having to give immediate answers. Practitioners can take the time to use their firm’s full resources to develop strategies, leading to solutions for the client and an opportunity to nurture an ongoing, larger stream of revenue for the firm.
“That’s revolutionary in our firm,” says DeLuca. “It forces us to break our old habits of interacting with clients and lays the groundwork for staff to be more valuable to our clients.”
Practice Forward can also be leveraged for a firm’s talent acquisition and retention. New employees can grow into their roles and gravitate toward their interests. And it provides a mechanism for more experienced firm members to share their knowledge with newcomers.
“We will end up with a more rounded practitioner, laying the groundwork for transitioning a staff member into an advisor,” he says.
Why Friedman & Huey recommends Practice Forward
Practice Forward has placed structure and uniformity in the firm, notes DeLuca, with everyone having a similar approach to client services. He credits Practice Forward for helping chart a long-term path toward increased revenue.
“That has an enormous value for us. My advice to other firms would be, if you’re not moving in this direction, you risk being left behind as other firms pivot into advisory.”
By providing more insights and services with their regular interactions, firms may maintain their existing compliance work while offering future-facing responses and solutions. All this results in developing a deeper, more valuable relationship with clients, one that proves beneficial for both parties.
DeLuca explains this is how Practice Forward provides a competitive advantage when it comes to satisfying clients.
“If you’re not already having the types of conversations with your clients that Practice Forward introduces, you risk losing them to other firms that approach the relationships as an advisor. I think Practice Forward can be a really important tool for every firm that wants to advance to the next level.”