Boutique advisory quality, demand set to rival big 4

The news was originally leaked by popular Instagram account, The Aussie Corporate, which was followed up and confirmed with the respective firms by Accounting Times.

In recent years, the big four firms have continued to make changes within their advisory divisions as the demand for it has decreased when small businesses and sole practitioners have ramped up their advisory services and offerings.

A comment left by an Accounting Times reader suggested the bigger tier firms were beginning to struggle in the area, based on clients sourcing it from smaller firms and professionals.

The comment read: “Cuts are nothing new as advisory work has been going towards small- to mid-size firms based on costs and other factors”.

This point and sentiment were echoed by Eddie Senatore, ex-Deloitte partner and principal of Eddie Senatore Advisory, who said advisory and services provided by accountants were “credence goods”.

According to Senatore, as advisory was a credence good, it ran the risk of over-servicing and under-servicing; therefore, the big four could have been under-servicing the area.

“You cannot judge the quality of even if the service is right, I mean, a tax return is a tax return, right, but could I do better on my tax? Who knows? A set of financials is a set of financials. Right,” he said.

“The big one, we, the user, don’t know if the service is good, bad, or just okay – have we got the best structure, or strategy, or advice? The accountant or service provider holds this knowledge.  It’s only sophisticated users who may have an idea.”

Based on this ideology, Senatore said the way to win was to provide clients with clear explanations, transparent processes, tried and tested outcomes, standards, guarantees, reputation and value.

In terms of the big four, or bigger tier firms, Senatore said the PwC and Deloitte AI scandals shattered the idea that bigger is better and could have perhaps led to clients questioning the standard of services – the “heart” of a credence good.

“Therefore, it is arguable that the barriers to entry for smaller players have lowered.  Now boutique players have a compelling argument,” he said.

“Bigger is not better, boutique and specialisation enable efficiencies and economies of experience and knowledge to come to the fore.  I can demonstrate this through clear explanations, transparent processes, proven outcomes, standards, guarantees, reputation, and value.”

Another reason provided by Senatore was the fact that clients were “bespoke”, what worked for one won’t work for another and “broke” the big four because of the systems and processes in place to garner efficiencies and prove quality control.

From his own experience working for a big four firm, he said the big four was about managing risks and did so by placing speed bumps throughout their processes, which had the effect of increasing non-value-added costs.

“The other key is about the client - this is a relationship, it is intimate, personal, specific and there needs to be attention on the client’s needs. They want to be the centre of attention.  If I go into a big four, I am part of the big four’s system and processes, and I may not get the attention I deserve because I assume bigger clients are getting it.”