On a Thursday evening in Edinburgh at the start of October, representatives from seven accounting firms along with three members of the ICAS tax team came together to discuss some of the most important issues they are facing and, by extension, all ICAS members working in practice.

They were also joined by three members of Credo. They included its Head of Strategic Business Investment, Matthew Norwood-Young, whose career has included six years with Investec, and William Godsave, its Head of Financial Planning, who spent seven years at Mazars. Credo is a global wealth management business with offices in the UK and South Africa.

Conducting the roundtable talk was ICAS Director of Practice David Menzies CA. What followed was a lively and insightful discussion covering a broad range of topics such as what clients expect from their accountant, the generational divide, the impact of AI, and the relationship between accountants and wealth advisers. This is a summing up of the roundtable that began with an introduction from David.

“Some of the key issues that CAs are having to deal with at the moment revolve around succession planning, retirement, investments, and what’s happening with the economy. Also, how do we help clients navigate the complex evolving tax system, the investment advice, and such like.

“What should clients be doing with the money they’ve accumulated or hope to accumulate, and how are they going to invest it?”

David Menzies CA, ICAS Director of Practice

“The world is a complex place at the moment. There’s a lot of changes in terms of tax policy and regulation. Also, there’s a lot of economic uncertainty. We’re not quite sure where inflation is going. Beyond the UK, we’ve got geopolitical instability, so there’s an awful lot for businesses and individuals to be contending with.

“Against that background, clients are looking to evolve their expectations of advisers. Areas like responsible investment and sustainability are starting to come into those discussions. What should clients be doing with the money that they’ve accumulated or hope to accumulate, and how are they going to invest it? So it’s a really complex environment that we’re working in, probably more complex than we’ve ever seen. What are you actually seeing in practice and does that resonate with what you’re seeing with your clients?”

Dalvir Johal: From my experience, our clients don’t really think in silos when they’re looking at their personal wealth or then their accountancy and tax. So it’s trying to put them in front of the right people and having those relationships where they know and trust that they're going to be taken care of, but also being transparent.

William Godsave: Clients don’t necessarily always know what the issues are. But I also think there’s a lot of worry about what’s going to happen in the future. So, it’s bringing the right people together to understand what the issues are for that client that we need to tackle first.

“The October 2024 budget was either a starting gun or a wake-up call. Everyone was hunky-dory, and suddenly we had this cliff edge at midnight that night around IHT”

Andy Logan CA, Managing Partner, Robb Ferguson Chartered Accountants

Plus, we’re finding a growing sense of worry or anxiety among private clients, about the future of the world, what that means for their kids, for their grandkids, and we’re trying to navigate with them through that unknown future.

Andy Logan: I think the October 2024 budget was either a starting gun or a wake-up call. Everyone was hunky-dory, and suddenly we had this cliff edge around IHT. The farmers were the good guys because they fronted it all whereas the average business guy was going crazy and started thinking, ‘Where can I go live now? Italy looks quite nice…’

On the other side there was this sudden interest in trust funds, which, for many, had been pretty minimal until that point. Clients were saying: ‘Listen, I’ve looked at my IHT bill. It’s huge, what can I do to mitigate it?’ So I think that for the profession, and from the wealth advisory side of things, it was a moment because the interaction with wealth advisers has grown and grown ever since. That budget sparked a change in professional life for us all.

Aileen Scott: Before, if you had a conversation about IHT, it felt like it was the longest lead-in ever, if indeed the client could make a decision. Suddenly, it really sharpened their focus because they started to look at other things beyond the business and their pension. I think what’s been focused on has changed a little bit at different points in time. So you get a run of transactions, where people are like, ‘I’ll just bank the current CGT just in case it changes.’

William: There wasn’t much of an expectation from the client to ‘come in and see me’ a few weeks before [the budget] to discuss what might happen in the future. Now if you don’t do that, it’s regarded as poor service.

“Everybody knows where they should step off and where somebody else should come in when it comes to investment advice, pensions, life insurance, anything like that”

Vivien Hogg CA, Partner, JRW Hogg & Thorburn

Michael Hughes: Another big change has been that we now have people coming in and saying ‘I’ve done this thing on AI and this is what it’s telling me…’

(This comment generated a lot of reaction and rueful laughter across the room.)

Aileen: You give somebody the outline or framework of an idea because you need them to buy into it. But by doing that, it gives them what they feel is enough information so that they can run it through an AI tool or chatbot.

David: There’s a generational divide when it comes to using AI but does that also apply when it comes to discussing tax and investments? We hear and talk a lot about what is perceived to be the ignorance of young people around financial planning but is that a misconception?

Matthew Norwood-Young: It’s a bit like the Dunning-Kruger effect where people feel like they know everything when they’re younger or overestimate their knowledge. We do see some very smart youngsters who’ll come in with their parents, and they’ll be the ones asking all the questions. Well, in some cases they demand the answers.

You need to see a few cycles of this to understand that they need to work together. The reality is that the generation that most of you service for the moment still value yourselves over a machine. That’s absolute. Change happens really slowly at first and then it happens very suddenly. That’s the way that we should probably think about the AI thing. You won’t experience the change for a long time in your client base, and then one day it will hit you. I don’t fully know how to plan for it because I think we’re all in the same boat. No one’s solved it yet.

You look at the massive amounts of money that companies spend without delivering much. This is happening. We need to avoid thinking that we don’t need to populate our businesses with young people, and thinking their jobs can be replaced. Because they are the people who’ll help to educate the rest of us around how we build into the future. What you need are youngsters smart enough to be able to make decisions alongside technology, because it’s quite easy to just not employ them because we’ve got the technology.

David: Vivien. Your clients are located in more rural areas. Are you facing the same challenges as other practices?

Vivien Hogg: They’re very similar and again I would also say the catalyst was that budget in October 2024 and the issues around IHT. When we talk about technology, we are still very fortunate that we’re getting good youngsters coming in through the door, and still want to come into the profession, which is gratifying. But I think that’s where we need to speak with ICAS because most of our trainees come through that route.

“I started my training in 2012, and firms were starting to think about what other skills they needed. For example, have we got people who can read and interpret legislation?”

Katie Close CA, ICAS Director of Tax

So, it’s making sure that their training now is going to be commensurate with what we’re going to need in a few years’ time. I’m not sitting in a silo to know that we don’t need to tackle AI. I know that we need to get our systems all organised, and that depends on the youngsters telling me what can we do more easily, what can we do quicker, who can we make things much easier for.

I would imagine many firms are having a similar conversation. But we don’t have the budget – that maybe is where some of the equity that’s coming into the business is going – to do that bit of the exercise.

Matthew: One of my favourite memes is a cartoon of all these big company CEOs at a boardroom table and somebody is leading the conversation by saying, ‘What do you guys want?’ And they say, ‘AI.’ And then they say, ‘What do you want it to do?’ They say, ‘I don’t know.’ They say, ‘When do you want it?’ And they say, ‘Now.’

Aileen: There needs to be some training around how to use AI tools that are available in the industry and how best to use them, because you can put a question into AI and get one answer, then sometimes it’s about how you interrogate the answer that you’re given. I’ve often challenged the chatbot. One thing is it will always come back with is a very polite response and will say something like, ‘Well, yes, you are correct!’

Andy: Some clients want somebody sitting there without any technology and they take great comfort in having a trusted adviser .

“Change happens really slowly at first and then it happens very suddenly. That’s the way that we should probably think about the AI thing”

Matthew Norwood-Young, Head: Strategic Business Development, Credo

John Moffat: We had a team day a couple of weeks ago. And one of the things we asked the younger members of the team to do was to write down everything they knew about one of their clients. And the replies were amazing. They knew about their personal life, their kids, investments, mortgages, and all that.

One of the things that came out of it was getting those members of the team to join advisory meetings and not just accounting meetings, so they can provide that business and tax advice. The reality is that some of that ‘low-level’ stuff won’t exist in the future. So for us it’s trying to get them to think less like accountants and more like business advisers.

Matthew: Technology can be your technician. We don’t employ people with purely technical skills in our industry anymore. So when we employ humans, they have to be humans. They obviously have professional knowledge but also empathy and warmth, because warmth delivers trust and trust results in better outcomes for clients.

Katie Close: I started my training in 2012, and among other things I had an English literature degree. So, maybe around half of my intake had an accounting degree, and the other half covered a variety of subjects and firms were starting to think about what other skills they needed. For example, have we got people who are good at communicating around things like tax? Have we got people who can read and interpret legislation? Are they approachable? But you could also have science grads for areas like R&D. So I think the profession has been moving in that direction for some time. But it’s about what comes next.

David: What challenges are you seeing in terms of the financial planning relationship at the moment?

Aileen: I’ve worked for two firms now that have had in-house financial advisers, and I’ve always thought that some of the difficulties arise around who’s responsible for what. Personally, I think that separation is better, and giving them names of people that I know and trust and letting them decide.

William: I experienced the same thing with in-house, and there were a lot of problems with it, partly because everyone felt like they had to put business their way. Although I guess from the client’s perspective they think, ‘This is my team.’

Michael: Touching on your point, William, you feel inclined to send clients to the in-house adviser, but it may not always be the right fit. It’s important to try and have a network of advisers with some better suited to smaller clients and some better suited to larger ones.

Matthew: It’s unlikely that an in-house person will ever get to the scale of an operator who isn’t [in-house]. The resources are just vastly different and coming back to the AI thing, the single in-house operator won’t be able to access the tools that a bigger business can.

David: When do you tend to think it’s the right time to bring in some external advice?

Vivien: I think that you accumulate that knowledge over your 30, 40 years of sitting in front of the client. You just know it, and that goes back to your youngsters.

I learned it at the heels of my previous partner. I sat through meetings, where I did all the work, and I thought, ‘He’s just sitting reading The Scotsman every day!’ But looking back now, the knowledge was accumulated almost by osmosis. Also, we are very mindful of all our licences. Everybody knows where they should step off and where somebody else should come in when it comes to investment advice, pensions, life insurance, anything like that.

“There needs to be some training around how to use AI tools, because you can put a question into AI and get one answer, then it’s about how you interrogate the answer”

Aileen Scott, Tax Partner and Head of Corporate OMB, Johnston Carmichael

Ryan Allan: I think if you’ve built up a relationship with your client then they will trust your advice and I’m happy just to give them a recommendation or a name, and then take a step back.

John: Through simply speaking to clients more regularly, you instinctively know when it’s the right time to bring in a wealth adviser.

Vivien: The problems we tend to have are around the legal aspects. I’m not decrying the legal system, but it’s expensive. Sometimes that external legal advice is out of somebody’s price range.

David: Are the dynamics and relationships different when you’re based in a small town or village?

Ryan: Our head office is in Orkney, and there are different factors to take into account. In a small community, people might have family that work in certain firms and things like that. So that definitely plays a part, because they don’t want that friend or relative to potentially know what’s going on with their personal finances.

David: The final topic for conversation is do you feel there are too many regulatory barriers for anyone doing their job at the moment, or is it kind of working?

Matthew: Because of some bad actors in the past in all of our industries, the pendulum has just swung too far on the regulation side. I’m not some kind of Trumpian deregulator, but I definitely think that an industry that employs professionals who have evidenced the fact that they’re professionals should have slightly more freedom around client solutions, client outcomes, delivery of service.

credogroup.com

The views and opinions expressed in this article are those of the participants and do not necessarily reflect the official policy or position of ICAS.