The Hayne RC has delivered further impetus and reasons for accountants to be the natural home of financial planning. The RC has encouraged advisers who are good at their business but attached to financial advice groups who have been highlighted as below grade, to want to find a new home.Article powered by Informed Investor
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This trend is complicated by the introduction of materially higher financial advising professional qualifications. This prospect has, according to The Financial Planning Association, made up to 30% of advisers decide to leave the business. Most of these are longstanding and experienced advisers who don't want to re-engage with a qualification enhancing process. They can, however, see themselves being key support staff under financial planners qualified under the new education qualifications.
While specific figures are hard to come by, my experience indicates that a significant proportion of the working population do not require a wealth management process beyond superannuation. This process caters for the person who makes regular contributions during their working life and then receives regular payments during retirement. Most major superannuation funds have advisers who can deal with the windfalls etc. The people who really need financial advice are those where financial outcomes are based on the ability to deliver a mix of good personal, business and super strategies.
Accountants are the logical providers of this mix. They have the financial data needed and have been involved in their clients' business strategies, taxation management, risk management, business succession planning and business assets in super. Accountants are likely to have a better reading on the risk tolerance of the client. Complement this with the planners knowledge of wealth management and portfolio strategies and options, and a formidable professional combination emerges.
There are quality standalone Australian Financial Services Licensees who concentrate on supplying the financial planning tools of trade to accountants. These tools include licensing, compliance, research, professional development, software, insurance services and business development support.
As accountants deal less with the paper war and the benefits of streamlined systems and improving digital government processes, they are more able to deal with what's really the value add — integrated financial advice and management of the client's affairs.
The move is not without its complications and challenges, but it does offer a wider horizon of professionalism for experienced accountants and more business growth opportunities for younger practitioners.
Many accountants have a well-oiled business and question the need to add a dimension that has a tarnished reputation. However, CoreData, a research business, reports that 'Extensive research of financial advice clients across Australia shows the average satisfaction rating awarded to financial planners by their clients is 7.91 out of 10. In the main, planners are doing a pretty good job.'
The cost of a qualified planner will rise as the new qualification framework for advisers will mean fewer advisers are available or the time frame required to get qualified is longer.
The accountant's year has peaks in activity. Financial planning is not a business that can be turned on or off, it requires a fulltime commitment to be successful and compliant and the licensing system for advisers interposes an external supplier into the service delivery. This is not always easy for an accountant used to running their business to accommodate.
Successful financial planners are likely to have fewer than 200 clients. The Hayne RC wants advisers to bill clients for ongoing services along the lines of accountants and the legal profession. Historically, where revenue has come from product suppliers, many advisers found it difficult to value their time and to present this to clients. Accountants know how to manage this.
Richard Felice in Money and Life (Dec 2017) is quoted as saying 'When both professions — accountants and financial planners — operate at their very best, then you're getting holistic advice that's carefully researched and focussed on your goals. We're finding more accountants are focussing time and resources into what the future looks like for their clients as opposed to making the best of what's gone before. This is an approach that's really driving the business forward. Because when you have a top-drawer financial planner and accountant, both taking time to understand you and communicate with you — and each other — about what's needed to prepare for your best future, you're really going to be on the front foot in all your financial affairs.'
The move by accountants to occupy the financial advice field is well established. However, the convergence of the RC process and recommendations and the imposition of higher qualification requirements for advisers, creates an opportune time and place to finally decide.
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