As one of the last independent accounting firms left standing in Canada, Ottawa’s Welch LLP is always looking for ways to set itself apart from the pack in an industry dominated by the “Big Four” of Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers.
So when Welch managing partner Micheal Burch began noticing that many clients were coming to his firm for tax and estate planning but looking elsewhere for someone to handle their investments, he sensed an opportunity.
“Many times, when we would be doing sort of a robust financial or estate plan, the client would say, ‘Well, what I am going to do with the money?’” Burch says from Welch’s downtown Ottawa head office. “It seemed logical that, ‘Yeah, you know what? We probably should (offer) that (service).’”
Burch’s push to expand Welch’s service offerings ultimately led the firm to form a partnership with Toronto-based Purpose Financial, which specializes in passive investments known as exchange traded funds. In early October, the two companies announced they had formed a joint venture called Harness Investment Management, a portfolio management company that aims to partner with other professional services firms looking to broaden their range of investment offerings to clients.
Purpose Financial controls 80 per cent of the new entity, with Welch owning a 20 per cent share. Burch suggests Welch likely won’t be the only smaller Canadian firm entering into such a venture in an effort to keep pace with other organizations that are also moving into the investment management space.
Judging from his conversations with fellow members of BKR International, a group of more than 160 independent accounting firms from countries around the world, he estimates that almost half of mid-sized firms in the U.S. now offer such services. In Canada, he figures, it’s closer to three per cent, but he expects that number to rise sharply in the near future.
“I think it’s what’s coming,” Burch says. “This opportunity to partner with them and have a joint venture with them really made us feel like, ‘Yeah, this is the thing to do.’”
Burch also notes that big banks such as RBC and CIBC that once provided services that complemented those offered by firms like his are now getting into the wealth management game themselves, and the Welches of the world can’t afford to get left behind.
“The lines are all kind of getting blurred, and we thought we have this opportunity to provide this service so it’s one stop (for clients),” he explains. “So it’s sort of like, ‘Just come here and we’ll take care of you.’”
That need to keep up with the Joneses was also a big part of what motivated another independent accounting firm, MNP LLP, to merge with Ottawa consulting company A Hundred Answers three years ago. That same year, MNP joined forces with Mississauga-based cybersecurity company NCI in a bid to boost its expertise in that emerging field.
Sean Murphy, the former CEO of A Hundred Answers and now a partner at MNP’s Ottawa office, says professional services firms today are doing what they can to ensure they cater to as many of their customers’ needs as possible.
“That’s part of us broadening the relationship with clients … so that clients don’t have a reason to go elsewhere,” he says. “I think what it really shows it that we want to listen to the market, we listen to our clients.”
Murphy’s firm offered HR management and tech consulting services to federal government departments as well as major private corporations such as WestJet. Many of those customers are now MNP clients, he notes, giving the Calgary-based firm a foothold in market verticals it hadn’t necessarily been able to crack in the past.
“They were trying to figure out how to expand into consulting services in eastern Canada, and in particular in Ottawa, with a federal government presence,” Murphy says. “They were looking for a consulting capability … to kind of give them instant credibility, if you will.”
Burch says his firm, which employs a total of about 350 people at a dozen offices in Ontario and Quebec, believes that partnerships like the one with Purpose Financial will help it win the ever-escalating battle for talent as well as client share.
“By having a broader list of services that we can provide, new employees can come in and they can test drive a few things, find out where their niche is, what they enjoy the most,” he says.
“It’s all designed to be better advisers, to create more knowledge about subject matter (so) that we can provide expertise to our clients.”
Both Burch and Murphy list cloud-based accounting services and artificial intelligence auditing platforms as the next frontiers for growth.
Welch, for example, is currently testing groundbreaking software from Ottawa’s MindBridge Ai that uses machine learning to detect discrepancies and fraudulent activity in a client’s books.