Food for thought about ancillary services, and specifically how such relates to CFO leadership services.
Ancillary services are certainly a prudent strategy to offer clients/customers services that might be of interest in addition to the core competency services desired, if the service provider has sufficient, qualified resources to provide such.
Most often the client/customer will NOT expect the same highest quality of core competency service when accepting ancillary services because efficiency of a same source combined with acceptable quality is a prudent merited combination.
A different perspective becomes relevant when Trusted Advisors are serving lower middle market and emerging privately held business owners and CEOs.
It is common for Trusted Advisors already in the Circle of Influence (COI) of a business owner/CEO to be asked to recommend Trusted Advisor options for other experience/expertise needed as situations arise. Many Trusted Advisors emphasize how their passion and experience/expertise includes providing ancillary services; and suggest their ancillary service enhances the quality outcome of their core competency as a primary factor of their competitive advantage when being compared to peers.
I encourage my clients to select Trusted Advisors based first and foremost on the core competence being offered. I suggest lesser (compromised) core competence should not be selected due to perceived benefits of ancillary services. I suggest ancillary service benefits should only be referenced as tie breaker. I suggest the extent of cost and effort to attain “ancillary services” from an alternative source that offer such as core competence often provides the best cost benefit option.
As it relates to CFO leadership services, this dynamic presents itself often.
If a COI Trusted Advisor is asked to recommend options for CFO leadership services I suggest it is imperative to the best interest of the business owner/CEO to gain an appreciation for the experience/expertise offered by a seasoned CFO compared to the experience/expertise offered by the individual providing such as an ancillary service that is not their core competence, or not the core competence of the firm (which likely influences the experience/expertise of individuals willing to work with such firm).
If a COI Trusted Advisor is asked to recommend options for other core competence services AND the advisor option suggests their merits include ancillary services that are likely core competence CFO leadership services, then I pray the COI Trusted Advisor will recognize and consider recommending a Trusted Advisor CFO in addition to the core competence prompting the recommendation.
I pray the following food for thought with respect to understanding and appreciating the merits of CFO leadership services will be understood in the context intended. Reflecting on 17-year proven track record as a ‘fractional CFO’ I have faith that I respect and welcome other Trusted Advisors offering advice based on their experience. It is in the best interest of a business owner/CEO to hear varying advice perspectives. However, I continue to observe many who do not understand or appreciate the overlap with seasoned CFO leadership. They do not recognize when the best interest of the client is to stay in their core competence lane, or at least recognize and respect the experience/expertise of a CFO. As a result, they may not recognize if/when a business owner/CEO should consider adding CFO leadership to their COI.
Outsource accounting firms and CPAs are more commonly offering “CFO services”. On the surface this is a merited ancillary service to their core competence. The experience/expertise of those willing to work for/with such firms should be assessed.
Some M&A Advisors focus solely on their core competence of taking clients to market; however, many offer and emphasize also providing consulting services to help the business increase its value before going to market. I respect that many have related business experience to have a positive impact, IF… a seasoned CFO is not involved. However, most CFOs will provide more comprehensive leadership and impact to contribute to value growth. Also, some CFOs have M&A experience that will provide core competence objective leadership for analyzing offers, supporting negotiation of offers and contract financial terms and conditions, and navigating the due diligence process identifying acceptable information requiring practical effort avoiding exhausting effort rubber stamping potential buyer literal requests.
Sales consultants offer certain core competence attributes contributing to pricing strategies; however, those strategies require quality data, AND often require comprehensive scenario analyses to identify the crossover profit point resulting from price and volume. Most lower middle market and emerging privately held businesses lack quality data for margin analyses AND lack a qualified resource for effective scenario analyses.
Employee Benefits Plan advisors offer core competence knowledge identifying options with varying costs. Some emphasize ancillary service expertise identifying cost savings options. I suggest some CFOs offer core competence scenario analyses that include consideration of employer share versus employee share alternative strategies. A seasoned Employee Benefits Plan advisor for one of my clients sums up the difference in the following reply to my request for additional options to effectively provide four (4) tiers of premium rates:
“Good morning, Glen,
UHC has a plethora of different plans, so let me see what else I can come up with. My numbers brain does not work like yours, so bear with me.
Warmest Regards,”
Attorneys often assert offering advice for financial terms and conditions for business contracts, and/or for Business Acquisition/Sale agreements. Again, I respect that many have related business experience to have a positive impact, IF… a seasoned CFO is not involved. However, with respect to business contracts, most CFOs offer experience/expertise AND comprehensive knowledge of the business (attorneys simply do not have) that provides greater impact. With respect to Business Acquisition/Sale agreements, some CFOs offer objective M&A experience/expertise AND comprehensive knowledge of the business (attorneys simply do not have comprehensive business knowledge AND are biased about risk aversion.)
Some Wealth Advisors successfully emphasize personal financial planning in conjunction with investment management. Those with active business owner clients sometimes offer business financial decision advice. Again, I respect that many have related business experience to have a positive impact, IF… a seasoned CFO is not involved. However, again they simply do not have the comprehensive knowledge and experience/expertise of a CFO.