Living the Dream
Most accountants and financial planners that I know who hold themselves out to be their clients “most trusted advisor” would like many of those clients to establish either boards of advice or a more formal board structure. The advantages to a small to medium enterprise (SME) of adopting this structure are many. It helps to improve the performance of the business, it helps to improve the management of the business‘s risk factors, adds an independent voice to decision making, assists with succession planning and adds genuine value to the business. That is the value of a business with a board structure in place and with an independent director on that board, is greater than the value of a business without these things. Ideally many of these same accountants and financial planners would like their SME clients to appoint them as the independent director or advisor on that board once it is established. From the clients perspective they not only get an independent voice at board meetings, but they also get their financial expertise as part of the role. Compared to the benefits and the value that is being created, the corresponding cost is quite small.
Why then don’t more accountants and financial planners and even solicitors, establish boards for their own businesses with an independent director? It seems logical that this should be happening more than it is currently. The benefits are potentially significant. The management and value of these professional firms would be enhanced, as would be the case for any of their SME clients. The advantages are obvious when you think about it. The performance of these businesses should improve. Risk factors impacting the business are likely to be managed more effectively. There is an independent voice at the table to enhance decision making and keep the business focused on its strategic plan and goals. Corporate governance would be enhanced. Issues like succession planning are likely to be actually addressed and the value of these professional firms would be improved. Given that the principals are in many cases over the age of 50 it seems logical that they would also want the value of their equity on exit to be as high as possible.
Having dealt these issues and put the structures in place for their own businesses, not only are they better off, but they are also then in a much better position to discuss these options with their clients. If we are going to encourage our clients down this path, surely in order to be really credible, we need to be “living the dream” ourselves.
Many professionals by their own admission have areas in their practices that need improvement. These are often the result of historical factors, work pressures and sometimes the personalities involved. Having worked all week on our client’s affairs there seems to be not enough time or energy left to address all that is needed in our own businesses. Sometimes many of these issues just get put in the “too hard basket”, because we don’t want to face up to things that may cause conflict between business partners, or addressing things like risk management or succession planning or improving our corporate governance seem not to be our most urgent or pressing concerns.
We cannot expect our clients to follow our advice or take action unless we, as their advisors, are also willing to adopt the same strategies. As professionals we all need to live that which we espouse to our clients.