Accounting firm cost cuts irk clients
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Accounting firm cost cuts irk clients PUBLISHED: 17 Feb 2015 PRINT EDITION: 18 Feb 2015 Gift Article:
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Agnes King Clients' perceptions of accounting firms' service levels have declined in the past year, after trending upwards for four years straight, as the full weight of commoditisation begins to wash over the profession. Preliminary findings of research carried out by consulting firm Beaton Research + Consulting shows the rampant cost cutting – engaged in so diligently by the profession over the past two years – has failed to impress clients. Declining loyalty intentions are also behind the downward trend as technology makes it easy for clients to switch firms and young consumers in particular show more willingness to pursue superior advice. "Commodisation of services is growing, differentiation is declining, one box of corn flakes looks more like the other," Beaton Research + Consulting chairman George Beaton said. "If firms don't stand for something very distinct, they stand for nothing and have to compete on price," he said. This, according to Dr Beaton, is a mug's game because clients' perception of value is not linked to price. KPMG head of markets Ben van Delden feels the trend captured by Beaton's research is not so much a decline in service levels as it is a spike in client expectations. Accru Felsers tax partner Brett Cox said the generational aspect can cut both ways. In his experience, young digital entrepreneurs are strong referers of work. "Once you get them, they attract others," he said. Beaton's findings also put the spotlight on the tension between the rise of "personal brand" versus corporate brand, as social media amplifies the former. Personal brand has always had currency in professional services but the movement of advisers between firms is rampant. "It is like a game of musical chairs: people move and a whole book of business walks," Dr Beaton said. Each year, Beaton ranks law, accountancy and engineering firms based on the superiority of service levels, gauged by surveying their clients. For the first time this year, Beaton added a category celebrating the performance of individual advisers, rather than just firms. It is, in part, a reflection of the two intersecting forces: the rise of personal brands, and firms recruiting more senior executives from outside. However, more importantly it's in recognition of the fact that "in spite of of the appearance of artificial intelligence on the horizon, professional services are delivered by people", Dr Beaton said. Some firms are banking on artificial intelligence to increase profit margins, expand into new services and relax the reliance on a single adviser. PKF, for example, has invested quite heavily in a technology-based benchmarking tool for its hospitality and franchising clients. Deloitte's private clients practice has done something similar. "It's product-based and more scalable," Anthony Sullivan, who oversees the project, said. "It makes personal brand less important." The declinein the overall perception of client service levels in accounting is prevalent among both the big four accountancy firms and mid-market providers, Beaton's research shows. But it is not mirrored in the parallel professions of law and engineering. "At this point in the cycle, commoditisation has impacted accounting more acutely as the distinction between one firm and the next blurs to ever-greater degrees," Dr Beaton said. KPMG's van Deldensaid the difference between accounting, law and engineering also stems from the fact accountants are servicing much more informed clients. KPMG, for example, has about 5000 staff in Australia and services clients who sometime have about 1000 trained accountants in their own business. The Australian Financial Review has formed a partnership with Beaton Research + Consulting for the 2015 Client ChoiceAwards, the winners of which will be announced at a gala dinner in March. The Australian Financial Review
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