Jane Hollinshead, former head of real estate at Addleshaw Goddard and now principal of IJD Consulting, shares her insights on how to make the most of the complex relationship between client and adviser
Once upon a time, maybe in the 1980s, the world of the real estate professional adviser was a simple one. No laptops or iPhones, the odd scrap of post and everyone had their own secretary. If you were qualified, you probably had your own office too (with walls and a door). Actually, it wasn’t even called real estate back then. That was a phrase coined by our transatlantic cousins and would never take off here, or so I was knowledgeably informed by a former senior partner. How the world has changed.
Today’s real estate community is bursting at the seams with professional advisers, arguably outnumbering the principals whom they are there to advise. The daily diet of the hardworking professional partner or director is one of targets, chargeable hours, regulation and tough competition. It’s a miracle that time can be found to squeeze in any advice.
The problem is though, that it’s not enough these days just to do the day job.
Accountants want to be lawyers, lawyers want to be thought leaders, agents want to be strategic advisers, and everyone wants to be a sector expert. Which makes the professional advisory world a perplexing place for even the most sophisticated client. So, here are some tips on how to get the best out of your professionals.
Choose your people carefully
Being a strategic adviser is a laudable goal in any professional services firm and, if delivered in a focused and relevant way, can really add value to a client’s business. However, if all the best brains are investing in this area – at the cost of “business as usual” advice, such as asset management where it is lower margin and possibly less exciting – then it is probably time to consider which is more important to you as a client. Thought leadership rarely drops immediately to the bottom line; transactions delivered by experienced practitioners with pace and commerciality do. Find out who is actually going to be doing this work, how experienced they are and who will be supervising them. It could make a real difference to how well your deals get done.
Consider your strategy
Consider the average large-scale mixed-use development and the spectrum of advisers on your wish list is likely to be a broad one. With an increasing focus on placemaking, you’ll need experts in master planning, financial modelling, tax, sustainability, construction, retail, residential, office and even wellbeing. Everyone will claim to deliver an integrated and seamless service.
But, here’s the thing: a bit like clients, advisers within the same organisation can sometimes operate in silos and, by definition, this can lead to a less than joined-up approach. Overcoming those vertical barriers when teams are running to different P&Ls can be a challenge. Test how a broad set of disciplines is going to be co-ordinated to deliver advice that is aligned to your strategy rather than your adviser’s organisational structure.
Separate strategy from execution
How much do they do for your competitors? Clearly, you want advisers who are completely fluent within your sector, which means acting for your peers. This is precisely how they add value. Cross that line of sector knowledge though and things can become a little uncomfortable. A good rule of thumb is separating strategy from deal execution. Any adviser who is party to the inner workings of your strategy should probably not be replicating that relationship with any one of your competitors. It is just good business sense.
Bear in mind that different types of advisers are subject to different rules around conflicts. Lawyers and accountants are governed by statutory bodies that have clear conflict rules. Others don’t yet have that equivalent regulatory framework, so you may have to be more directive around your expectations in this space.
Location, location
Does location matter? Some clients want their advisers no more than a taxi ride away. For London-based clients, that now comes with a price. Rising rents in the City and West End mean many advisers are reallocating lower-margin work to Manchester, Belfast and mainland Europe, keeping only the most profitable elements in London. Others want their advisers to be global, benefitting from trends and connections with the other side of the world. Conversely, as investors look to the regions, the benefits of using local experts with local insight becomes increasingly attractive. Pay your fee and take your choice.
Show some gratitude
Finally, advisers are human beings too. They are running businesses and paying salaries, like you. They don’t like chasing unpaid fees, but they do like being treated as one of the team and receiving clear, consistent instructions. They love to be thanked and told how they are doing, good and bad. It all helps them provide a better service. Funny, isn’t it, how some things haven’t changed at all?
• Interact with Jane Hollinshead at @JHollinsheadIJD
