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10 questions every Australian advisor will be asked this end of financial year

This is a guest post by Andrew Van De Beek, Founder and Head of Purpose at Illumin8a Xero Platinum Partner.

If you’re anything like me, each year as tax time rolls around, you find yourself inundated with  ‘quick questions’ from clients. Naturally, they tend to range in complexity and, as a result, so too does the amount of  time it takes to quickly respond. However, this is also when many of our clients rely on us the most, and how we respond is a chance to reinforce trust and value within those relationships.

As advisors, understanding the questions we’re likely to come across – before they’re asked –  helps in preparing personalised answers with the right information. It also saves our inboxes (and mental capacity) from becoming overloaded. With the help of my peers, I’ve compiled ten questions that many advisors are likely to be asked in the coming months. While this list offers advice, only you know what’s best for your clients – simply take from it what you need to do what you do best.

1. “How is this end of financial year (EOFY) different from the last?”

In contrast to last year, we have a clearer understanding of COVID-19’s financial impact. This means we can assess how the pandemic has affected a business overall. When communicating this to clients, I like to explain that our job is to strip back the ‘COVID-numbers’ – or taxable government benefits, like JobKeeper – to establish how well they’re doing without inflated support.

2. “What will you be looking out for when reviewing my business’ numbers?”

Give clients a heads up that you’ll be looking for outliers. As well as pandemic grants and funding, these could also include the costs associated with business transformation. From a tax perspective, communicate early on whether these are deductible expenses.

3. “How will JobKeeper impact me this EOFY?”

As we all know, JobKeeper inflates wage expenses, meaning  we’ll need to narrow down how much a business’ employees cost without any subsidies in the new financial year.

Many small business owners don’t know that JobKeeper is a taxable income – EOFY is a chance to get on the front foot of this conversation. Instead of answering hundreds of the same questions, you could send out a newsletter or put together a blog post to refresh the JobKeeper-specifics your clients need to know about.  

4. “I feel like my business isn’t doing well, can you help me?”

Small business owners are entering this EOFY with a lot of emotion. After all, it’s been a chaotic twelve months. Remember, it’s our job to bring facts, numbers and truth to those feelings of doubt or uncertainty, and to communicate them in a balanced way. Trust is the bedrock of all great relationships in our industry, and a little assurance can go a long way –  to put your client’s mind at ease or get them on the road to recovery.

5. “How can I pay less tax?”

This question often translates to, “what can I spend money on?” To offer some perspective, I suggest outlining a simple equation; if you have to spend $4 to save $1 of tax, you’re still $3 out of pocket. I’ll then put the question back to them; will that tax deduction support your business’ performance? If the answer’s “no”, I advise against spending to ‘save’ on tax.

6. “Help, I’m not sure if my business is set up properly?”

EOFY is a great opportunity to re-evaluate your clients’ structure from both a tax and risk perspective. It’s also a chance to educate them on what category their business’ structure falls under, helping them feel confident in how they’re set-up. You could start the conversation with a simple set of questions which will reveal whether they stand to benefit from a restructure.  

7. “How can I make my business more efficient in FY22?”

This question always comes back to; how can I improve my processes with technology? EOFY is the perfect time to introduce your clients to digital tools – especially if they’re transitioning to a new accounting software – and help them learn the skills they need to operate more efficiently.  Consider setting your clients ‘homework’ for FY22. There are plenty of easy-to-navigate courses available on Xero Central that range in skill level and expertise.

8. “What do I do with my cash on hand? And, can I take my cash out of the bank?”

Cash questions are common, and if your clients aren’t asking them, you should be – especially if they plan to borrow from a bank within the next year. You need to know the difference between a client’s maximum borrowing capacity and minimum tax exposure, finding consistency between the two. It also means that as an advisor, you can better prepare your year ahead, knowing when your clients plan to go for finance and how you can support them.

When it comes to withdrawing cash, make sure your clients understand the tax implications involved. Get to a level where you can have this conversation fluently – as tempting as it is to get technical, try to minimise jargon so they can understand their options clearly.

9. “Why can’t I just do my tax return myself?”

Here lies an opportunity to reinforce your value as an advisor, while gently outlining the risk involved in taking on a tax return without any expertise. Showcase what you can offer beyond finances by checking if there are ways that you can help them succeed in other areas of their business. Sometimes, this means connecting them with experts in your network, however,  keep in mind that referrals should reflect your business’ values, so only refer to those who you trust.

10. “How can I prepare my business for the financial year ahead?”

This EOFY isn’t just about tying up FY21; it’s also a chance to prepare your clients for the year ahead. Before they come to you for advice, be proactive by asking what they have planned for their business in the next twelve months. By tax time, this means you can have suggestions ready to help them get to where they want to be.

Whether it’s answering a ‘quick question’, or unpacking a complex business plan – how we communicate with our clients is all about building trust. Behind each and every question is a small business owner who cares, and if we can reciprocate that with considered responses, we’re on our way to building lasting relationships.

Why leave it there?

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