The Wize Way

Episode 111: How to build client portfolios for your accounting & bookkeeping firm

• Wize Mentoring for Accountants and Bookkeepers • Season 1 • Episode 111

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As the client base of practice grows and you begin to expand/add teams to the practice, it's important to develop client portfolios for each client manager. In this episode of The Wize Guys Podcast, Ed Chan and Tim Causbrook discuss the context of building client portfolios, their importance, and some of the challenges that practice owners face when developing them. 

Ed reveals the critical strategies for building an effective client portfolio team. You'll learn the importance of strategic team composition and why hiring experienced senior staff early on is a game-changer. Discover how to streamline client communication and train junior team members, setting the foundation for a robust and efficient team. Ed also shares insights on managing production and communication traffic flows, offering expert advice on the specific skills required for each.

Find out more about the Wize Traffic flow quadrants and how to build an ideal team structure for a more profitable accounting business!  Plus, get the lowdown on why proper hiring and training are essential for creating a successful practice. Don't miss these essential tips for turning your accounting or bookkeeping practice into a profitable and smoothly-running business!

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Wize Mentoring:

From Wize Mentoring is T he Wize Guys Podcast, a show about accounting and bookkeeping practice owners and the many stories, lessons, and tips from their experience of transitioning from a time- poor practice to a business that runs without them. I hope you enjoy and subscribe. We're looking at design today, we're looking at building teams and we're looking at one of the most important positions in the team. So the topic today is on how to allocate client portfolios to teams effectively and how to allocate clients to the teams and, in particular, we're looking at the client manager part of the client portfolio. So I guess, just to start us off, ed, can you explain to us why it's important to think about client portfolio teams, why the client manager is really integral to making those allocations correctly, and why we even need client managers in the first place? Ed Chan: Okay, thanks, T im. If you're small and if you're only just starting out and you're building your clientele and you've got to get the work out, so at that point you've got to start hiring people to help out. All right, so the clients will get referred to you or you might be advertising for them. So they all come to you and they come from all different industries and different personalities and so forth, and because you've started your own business, you take them all on and then you try to get the work out the door, and generally what happens is that, depending on your, you'll have to either hire someone that's experienced or hire somebody that's less experienced, which will obviously cost less. But then as you grow, then you've got to decide what kind of person to bring on, because it's not just what I call throwing a body at the problem and hiring more and more people and just throwing more bodies at the workload, and that doesn't work and it will end up costing you a lot of money and you won't be very profitable and it gets very clunky if you're not a lot more scientific, if you're not approaching it. A lot more scientific than just hiring somebody. So, obviously, when you're really small, more scientific than just hiring somebody. So obviously when you're really small, you have the choice to hire someone that's really junior or a more senior person. I would go with the more senior person and I know you're looking at the dollars. But if you invest into a more senior person, then it can take the workload off you so you're not dragged into having to train a junior, and initially it would be okay. How do I afford this? Ed CHan But as soon as you create capacity, that gets filled up again. So your production capacity gets filled up with new clients coming through. And that's happened for me as I was growing mine. So as soon as I create a capacity, I got more new clients in and then I hired somebody else, created more capacity and then more new clients came in and financially, you know, you might have to take a step sideways or a step backwards in order to step three or four steps forward. So it's a little bit of a you know, walking up steps if you like. And because that senior person, that experienced person that you hire, will then train the next person, you might be able to hire a less junior person and the next person that might be able to hire a less junior person and the next person that you hire, and that senior person or experienced person that you've hired then trains the junior one, and so forth. So, but if you're looking at the first employee and you hire a junior, then you've got to train that person as well as trying to deal with all the work that's coming through the door.

Ed Chan:

Now, as you get larger and it becomes more sophisticated, you can see that you then have to recruit a senior client manager. You've got to start getting a lot more scientific and start managing traffic flow, because there's two types of traffic flow. There's production traffic flow, and you can see on the horizontal line down the bottom, you've got communication traffic and you've got production traffic flow, and you can see on the horizontal line down the bottom. You've got communication traffic and you've got production traffic and you've got to hire people to suit the traffic. And production traffic is easy to understand. You know the work needs to get done. Whether it's bookkeeping or accounting or whatever it is, it needs to get done. So you've got to hire people to do that work.

Ed Chan:

And then there's communication traffic, which is, you know, communicating with the clients doing their tax planning, taking their calls, answering their emails, having meetings with them doing the tax planning meetings with them. So that requires a different type of person that has a skill in being able to communicate with the clients. Now, I'm not just talking about talking to the clients, I'm talking about being able to relate to them and communicate to them at a higher level. So the kind of person that can suit that role is if, for example, you prepared a draft set of accounts, the client's made $100,000 profit. You've now worked out that he's got a $30,000 tax bill. The client says to you there's no way in the world I could have made $100,000. There's no money in the bank. How am I supposed to have made 100 grand? So the person that sits in that seat needs to be able to explain to the client so that the client can understand where his hundred thousand dollars have gone to right. So that's not the same as the person who asks questions around. You know missing a bank statement. Can you send me bank statement 42, right? So it's a different person that handles communication.

Ed Chan:

As to production, so they're the two types of traffic that comes through the door and then, as you can see on the left-hand side, is traffic complexity. So you can see there's low-level traffic and there's high-level traffic and we break them up into A and B-class clients and C and D-class clients, and the C and D-class clients is generally handled by an assistant client manager. An assistant client manager is not as experienced as the senior client manager, so he or she handles the communication with the C and D class clients and they're in training. I guess, if you like to become a senior client manager clients and they're in training. I guess if you like to become a senior client manager. Now, that's not the same as the top right hand person, which is the senior production manager. The senior production manager is much more senior than the assistant client manager. Yeah, however, that's as far as I can, because they don't have the communication skills to become a client manager. They they can do the work, they can check the work, they can push the work down to the accountants and bookkeepers or I call them to the grinders to get it done, and they can manage the team and check the work and review the work, but they don't have the interpersonal skills to progress to a senior client manager or an assistant client manager, although they've got a lot more experience than the assistant client manager. The assistant client manager has the potential because they've got the potential to have good communication skills so they need to be trained up. So they need to be trained up with the way they communicate with the clients. So you start them off with C and D class clients. But they also got to do the work because they're not experienced enough. So the senior production manager helps train them in doing the work, because in order to be able to sell the sizzle, you would have had to have made a few sausages in your time to know how to sell sizzle. Have made a few sausages in your time, so know how to sell sizzle. So the senior production manager is helping them with a lot of their production.

Ed Chan:

The assistant client manager is fairly still fairly hands-on, but they handle the cnd class cars, for example, eye returns. So they take on the eye returns. They either do it themselves or they push the iReturns to a production person in the bottom right hand corner where you can see the blue triangle, which has got accountant bookkeeper and that could be someone you know in overseas on a lower cost. So you can push the work down to them, get the work done. Or it could be someone who's less experienced, but in training the work gets done. Comes back to the assistant client manager. The assistant client manager finishes the iReturns off and then calls the client. So that's the two people working together to service an individual return. The reason why an individual return doesn't go up to the senior production manager is because you don't want too many hands touching that job, because it is a low cost product. Otherwise, if you have too many people touching that job, the profits will disappear from it. So the best way is for c a nd d class clients is the assistant client managers to manage someone you either in their own team or overseas, at a lower cost to get the work done. And they do all the communication with the clients. So you're investing in your balance sheet by training people up and bringing them through. Now that leaves the senior client manager with the communication with the a and b class clients. So they then need to work very closely with the senior production manager, which is the one on the top right hand corner, and together they work in a team. So the senior production manager he just gets the work done, he reviews it, pushes the work down to the accountants to get the work done, dots the I's, cross the T's, hands it to the senior client manager who's communicating with the clients and he or she goes and calls the client up, either has a meeting with them or has a face-to-face meeting with them or a Zoom meeting with them and explains the results to them.

Ed Chan:

And in order to build this team, you've got to hire the right people with the right skills and you've also got to match them up with the clientele. So you've got to match the personality of the client with the personality of the senior client manager. Sometimes, if you don't get the matching right, then you could lose a client. So it's very important that't get the matching right, then you could lose a client. So it's very important that you get the personalities right that suits the client. And often I'll say to the client look, we've got three teams here, we've got three senior client managers here, and if you're not getting along with someone, let me know. They just leave, let me know, we can try somebody else. So I say that to them right up front in all our communication we also say that to them. So that's the gist of how it's run.

Tim Causbrook:

You know that's really great Thanks. Hopefully that clears up a lot of things for people who are still kind of getting to grips with the terminology and the mechanics of the Deeper Narrow team. It is the key to production, so it is really really important to get this right in your own firms and it's not necessarily easy in terms of getting people in those roles, but it's really worth persevering with. But thanks very much for that, E ed.

Wize Mentoring:

Thanks for tuning in. If you liked this episode, please remember to subscribe and leave us a five- star review For more practical W ize tips on how to build a business that runs without you. Head over to wizementoring. com/ podcast to download a free copy of the Accountant's 20-Hour Workweek Playbook. We've included a link in the show notes below. See you on the next episode.