Partner Article

Confidence for professional practices reaches all-time high

Confidence in business outlook reached its highest point in the 21-year history of the professional practices survey, conducted by Smith & Williamson, the accountancy, investment management and tax group.

99% of respondent firms cited a positive outlook for the year ahead, up from 96% in 2014 and exceeding the previous high point of 98% in 2006.

Lee Blackshaw, head of private client tax services at the Manchester office of Smith & Williamson, said:

“The survey suggests that professional service firms in the North West and North are enjoying an unprecedented level of confidence. This is a genuine signal that activity is now exceeding the levels seen before the financial crisis. Political certainty, economic resurgence and corporate actions are driving optimism.”

According to the survey, around two thirds of firms in the North believe competitive pressure has increased in the last year. According to Smith & Williamson, these intense competitive pressures reflect widespread changes in the professional services market, driven largely by new entrants to the sector and new ways of working. Lee remarked:

“Professional firms are being squeezed on all sides by the arrival of new business models and new entrants to the market. In particular, all firms face a massive threat from new uses of technology to gain and interact with clients.” He continued:

“Firms need to develop a ‘clear differentiator’ to stand out from the crowd, thereby demonstrating the value they deliver and to help them resist downward pressure from clients on fees.”

“If firms are simply enjoying improved performance from an improvement in the economy, they shouldn’t be surprised if they quickly slip into reverse when the economy takes a downturn.”

Lateral hires and further investment for the North and North West’s firms

According to the survey, more than three quarters of firms are seeking to increase lateral hires in the coming year and Lee believes that higher levels of team ‘poaching’ are almost inevitable in the current climate.

The survey also reveals that around half of respondent firms in the North are planning to increase the range of services they offer in the next twelve months while a third are expanding office space.

Similarly, virtually all respondent firms from the region reported an increase in marketing expenditure and the amounts they put into IT.

However, Lee cautions: “So while the majority are trying to up their game, any firm lacking an appetite for change or without strategic vision and drive to differentiate themselves in today’s fast-changing market could suffer the consequences. With the economy currently relatively benign, now is the time to face any tough strategic decisions and to invest appropriately to build the business.”

About Smith & Williamson’s 21st annual survey of the professional services sector:

95 professional firms took part in the survey during July and August, 2015, which included respondent firms in the North West and the North. The survey has been tracking developments, trends and attitudes among the sector since it started.

Respondents included primarily law firms with patent agents and businesses from the property sector.

Business structure for the total group: 75% LLP, 16% partnership, 9% company

This was posted in Bdaily's Members' News section by Smith & Williamson .