The national practice prepared for economic uncertainty

As we grapple with rising inflation and cost of living pressures, Xero’s State of the industry report shows that many advisors (43 percent) anticipate some of their clients will be at risk of closing in the year ahead. For Dace Harris, RSM Australia’s National Head of Business Advisory, the looming threat of recession sees him focused on two things – trusted relationships and timely data. Why? To prepare his clients for whatever comes next. 

When asked about his outlook on Australia’s economy, Dace Harris’ response is what you’d expect from a numbers man – level-headed and analytical. “No one has a crystal ball, but challenges are certainly on the horizon. Our job is to help clients make rational decisions when they’re in an emotional headspace. And we do this by turning to the data.” This is the cool, calm and practical attitude that advisory demands nowadays. But it’s not always easy to front.

Through recent years, Steven Cuffe – a business advisory manager and Dace’s right hand at RSM – was on the front line helping entrepreneurs protect their livelihoods. But despite his best efforts to leave emotion at the door, Steven (like so many others) felt the weight of responsibility. He explains, “It was tough. But we eventually learned that in order to help others, we had to put our own lifejackets on first.” 

Now, as the nation braces for more expected turbulence, the State of the industry research reveals that over half (56 percent) of firms anticipate clients will need more support. This is why now’s the time to get your practice and clients prepared for the future, which is exactly what RSM is doing.

Leveraging data to drive decision-making 

Despite the unpredictability of the economic environment, the advisory profession leans on one variable – data. And with a mind for technology, Dace has always understood that numbers and automation are the source of truth through good times and bad.

He says, “Although digital tools are far more sophisticated nowadays, advisors have always relied on data – which isn’t the case for many small businesses. So with uncertainty comes this heightened need for automation to pool as much data as possible. Why? Because this gives clients the ability to make decisions based on facts rather than emotion.” 

Steven goes as far as to say this is what’s helped many of his clients survive recent years. “We saw small businesses use data to pivot. For example, when moving from a brick-and-mortar store to online, they immediately had access to customers when they weren’t physically reachable,” he explains.

To recognise the value behind this kind of decision-making, Dace says every small business needs a base level understanding of data. And if they don’t have this? Their advisor should provide education support. He says, “Advisory needs to be interactive. It’s our job to provide guidance, but ultimately, the client is in charge of their own destiny. If they don’t understand what they’re looking at, they need to be educated. It’s not enough to bury your head in the sand anymore – especially in such unpredictable times.”

Putting client trust above all else 

Although he might’ve convinced you otherwise, Dace’s favourite aspect of advisory isn’t numbers – it’s people. In fact, he considers managing trusted relationships the most essential part of his profession, explaining, “Communication is a learned art. However, unlike a maths equation, there’s no perfect answer or way to do things.” 

The human side of advisory can indeed be messy. From hefty debts to marriage breakdowns, Dace has seen clients go through many scenarios where emotions run high. And through it all, he’s found a way to lead with empathy and honesty. 

“In my early years, I struggled with this. But I learned from my mistakes and dealt with the consequences of avoiding difficult conversations,” he says, adding, “You always have to be on the same page with clients, even if it means delivering tough news. Through rapid change and disruption, minimising the expectation gap becomes even more critical. It takes time to master, but ultimately, I love this aspect of what I do.”

Alongside embracing digital innovation, Dace firmly believes that the foundations of great advisory stay the same – despite life’s twists and turns. Because in his profession, data and trust are two sides of the same coin. 

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Dace’s tips to prepare your practice for economic uncertainty:

1. Scale automation to build resilience 

When advising clients on digital strategies, don’t forget about your own practice. Automate as much as possible to free up resources for growth and profit.

2. Keep a close eye on your lock-up cycle

To brace for disruption, review your lock-up cycle with cash flow front of mind. This might mean reducing your billing terms from six months to three when renewing client contracts or taking on new business. Remember profit’s only real once the payment comes in.

3. Invest time in building trusted relationships

Keep the lines of communication open with your clients. Find a mentor if you’re unsure about how to approach challenging conversations or set clear expectations. Observe how they approach different situations and practice when you can. Most importantly, though, learn from your mistakes.

Head to our State of the industry page to download the full report today.

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Source: Xero Blog