Gatekeepers and Trusted Advisors

"JAH of Connecticut" submitted this question:

As you mentioned in The Trusted Advisor, trust implies keeping client confidences. In theory, accountants, lawyers and others are also supposed to police the actions of management in the interests of shareholders or the public. But doesn't doing so necessarily exclude them from being management's "trusted adviser?"

The responses to Enron and the other scandals has reinvigorated the role of gatekeeper in many professions. Bankers, insurance companies, insurance brokers and agents, investment advisors, and others now have positive obligations to prevent their products and services from being used as instruments of fraud.

There are very few professionals who are so renowned or so essential that they can walk away from the miscreant client or can afford a reputation as a potential fink or "inflexible rule-citer."

The professional who wants to work with or inside public companies now must be a gatekeeper first and a trusted adviser last. Companies attitudes now are "We used to work together, now the auditors are the policemen/adversaries not consultants/advisors. We don't share strategies, ideas or proposals with them any more than we would share them with the IRS."

What does this mean for the professional who is trying to market himself or herself to public companies?

I did address similar concerns as these in my article The Auditing Debate (which is on this website) which came to the conclusion that the gatekeeper and advisory roles are inherently irreconcilable.

However, JAH may be misunderstanding what my I meant by being a Trusted Advisor. I did not intend it to mean "I'm exclusively on your side." A trusted advisor is not some caricature of a mafia consigliere out of the movies -- a professional hit man or woman. It means letting your client know when he or she is contemplating something illegal, immoral or just something that will create a bad public image. The key to the role is the skill of doing it so that you actually have influence, and don't just come across as a nay-sayer.

It means having a big-enough repository of trust so that you can successfully get your client to actually listen to and act on your counsel. As I stress in the article, it is an attitude and a set of skills in helping the client understand options, face reality, and reason through to a sensible decision or conclusion.

And that's the way you've got to market yourself. If you even hint in your marketing that you're an amoral gunslinger for hire to whoever pays the price, guess who's going to hire you? The good guys or the bad guys? The only way to avoid the bad guys (ie future troubles) is be clear about the role you're prepared to play, and what you're not. And if that loses you business with the bad guys, well, is that good for you or bad for you? Why is it so hard for some professionals and professional firms to understand that there is such a thing as bad business you should not take on?

Yes, it is going to take a lot of courage and self-discipline to do it that way, but it's the only sensible long-run approach that's going to keep you out of jail. The lessons of all the scandals (and near-misses that didn't hit the papers) is neither that we now have more onerous regulation to adhere to, nor that that commercial pressures will continue to be irresistible. The lesson is that it's just not worth it to play it anything but straight.

I'm afraid that JAH may be right, though. Many professionals are going to continue to get themselves in a LOT of trouble by being afraid to question what their clients are asking them to do, not least because of the financial pressures imposed from firm management. I don't think we've seen the last of the professional service firm provider scandals. He (and many others) think only a special élite can afford to walk.

I disagree -- we can't afford not to. And I still maintain that one of the best ways to avoid the ultimate confrontation is to point out, when appropriate, things like: "What you are suggesting is legally risky, and if you were to take that route anyone in my position would have regulatory obligations to notify the authorities. Let's keep trying to understand the feasible options and not put you or your company at risk."

If you can develop -- and market -- the counselling skills that The Trusted Advisor analyses, you're going to have a very healthy book of business -- and avoid ending up in either the cell block or at the bottom of the river wearing concrete shoes.

Anyone else out there want to pitch in on this important issue?