“How do we charge for advisory services?”
Three CPA firm owners and a business lawyer asked me this question in the past two weeks. They all told me they’re seeing the push for advisory services everywhere, from other providers to the biggest names in their industries.
They don’t want to miss out on this latest trend.
In our conversations I asked them for their definition of ‘advisory services.’ Four people, four different definitions.
You too probably have your own definition of advisory services.
So, before you think about charging for them, you have to nail down what advisory services means and, more importantly, how they create impacts for your clients.
No, I’ll take that back.
First, you have to ask, “Do my clients wake up each day thinking “I wish my CPA/lawyer/expert offered advisory services?”
I think not. If everyone defines it differently, or doesn’t really know how to define it, how can a client think they need it?
IMPACTs though
—they know they need them. (Although I acknowledge that most business owners don’t wake up thinking “I need some IMPACTs today.”)
They think in terms of ways they can change their life.
They ask themselves “How can I get to X today?”
Changes that add something that’s missing or subtract something that’s not serving them well, or that’s doing harm. Something that takes them in a new direction, or that adds a bigger dimension to the direction they’re going.
Then they think about their full range of responsibilities: revenue, profit, personnel, operations, marketing, technology, and so on.
In which areas would an impact change their life?
Customized IMPACTs, not advisory services
Each firm owner has unique strengths and areas where they struggle. If your firm commits completely to customizing everything for each client, you will be positioned to charge for that customization.
Let’s imagine the Owner of a construction company that specializes in the construction of small local strip shopping centers. That Owner makes dozens of decisions every day and typically has several projects going on at any given time. Do you think that owner looks at their inbox full of emails or the piles of papers on their desk and thinks “I wish my CPA offered advisory services”?
That Owner’s CPA has tools for organizing information, measuring profitability of any project before it starts, and alerting the Owner to anomalies that could have adverse tax implications.
If the Owner had those tools working for them, their life would be changed. They’d improve operations, increase profitability or avoid losses, and weigh tax implications beforehand.
The Owner doesn’t have those tools because the CPA talked about “advisory services.” The CPA made a time or task-based offer, and the Owner brushed it off because it did not speak to the reality of their life.
Both the Owner and the CPA are losing out because of the phrase “advisory services.”
You Can Do Better
3 Steps to changing client’s lives without mentioning advisory services:
- Know in their words what Owners wish they had or could do that they currently struggle with. Example: “I spend too much time tracking costs because I worry all the time about unexpected expenses eating into my profit.”
- Use their words in your conversations with them. Like this:
“Hi Joe, I’m hearing that construction company owners worry all the time that unexpected costs will eat up their profit. How are you ensuring that your projects actually generate the profit you planned?”
- Listen to their answer. Most likely they are not ensuring their profits and are doing a few random things or not doing anything. If they are interested in your help, design 3 customized options that create the changes they want. Let them choose. Get paid at time of purchase and get to work creating those changes.
You can call this “advisory services” if you like but you can be sure the client will not use that language. Your fee will be proportional to the significance of the changes you created.
Banish the jargon “advisory services” and start using the words and descriptions your clients use.
Your competition is piling onto the advisory services bandwagon. You do not have to.
One month till New Years Day.
How are you putting plans in place for pricing that compensates your firm for the life changing differences you create? I have ideas. If you’d like to hear them, schedule a meeting in December.
