Published in Money Management, August 31 2010
A sustainable revenue model needs to focus on more than simply charging an hourly rate, according to Brisbane accountancy firm elliotts.
The Managing Partner of elliotts, Matthew Schlyder, warned financial planners the hour-based revenue model used by accountants could result in unsatisfied clients and unproductive staff.
“Staff complete work according to target hours, instead of getting the work done as efficiently and as quickly as effectively possible,” Schlyder said.
“Accountants often work out how much to charge a client after they complete the work and invoice accordingly. Clients therefore have no idea what they are going to pay prior to the work being completed and value cannot be communicated,” he added.
However, he advised financial planners to consider charging by the hour only when managing capacity and costs and to align their pricing structure to the value they are providing the client.
“Most accountants are fearful of their client relationship around price, and because of this they don’t value their own skills, experience and intellectual property,” he said.
Schlyder said the fee-for-service remuneration model is now a reality that cannot be ignored and those who do not make the transition from commission based payments smoothly might face some difficulties.