Speaking to SMSF Adviser, Mayflower Consulting’s director, Sarah Penn, said that while an organisation may seem to be offering a licence because they want to support accountants in providing excellent SMSF and financial advice services, this could be likely to change.
“A few years down the track, when those dealer groups aren’t making any money and are burdened because they’re running a dealer group at a cost, the will may turn around into more of a sales approach,” she said.
Ms Penn said that given that dealer groups often struggle to make money from licensing fees alone, it is difficult to see the longevity of a dealer group business model that does not make money through other means.
“If I ran a big institution and was looking around at all the things that were costing money and that had risk, I would look at a licence that wasn’t actually delivering a decent level of income to the business or cross-sell and think, ‘what am I doing with that?’” she said.
“There’s nothing evil or nefarious about that; it’s just business.”
Despite this, Ms Penn said that if accountants do find themselves under a licence that is a bad business fit, this does not necessarily mean they are forever stuck with that particular licence.
“Changing licensees isn’t the biggest deal in the world and I think that’s an important thing for accountants to remember, whether they choose to license themselves, [choose] not to become licensed, or obtain a licence through a large institution or smaller group,” she said.
“It’s not a quick process and there’s a bit of pain involved, but I think the level of scrutiny of licensing at the moment is making people feel if they don’t get it perfect now the world will end, when it’s really not the case.”
George, their are independent licensees who only work with accountants, who do not require you to meet any KPIs or sell badged product and authorise you to advise in only those areas that you wish to specialise e.g. SMSF/Superannuation. Tony Zulli, Accountable Financial Group, Sydney.
GeorgeVC, sadly you are misguided in relation to JV’s. We run four successful JV’s (with more in the pipeline)and our accounting partners are loving it. Why wouldn’t you want to own 50% of something which costs you nothing, but some of your time, to build? The fact is, when it comes time to sell (at a mutually agreed time) the FP practise will probably be worth more than the accounting, given time (you are doing well if you get more than 90c in the dollar for accounting). A well run FP practice should get a 3 x multiple for $1 in fees, so even if you split that 50/50, a dollar in FP fees will be worth $1.50 to the accountant, not a bad return. No George, we are not all out to shaft you (as you so eloquently put it), it’s just good business sense to come together, especially now with limited licensing coming in 2016. I welcome all enquiries. Matthew Kidd, Managing Director, Omniwealth.
Don’t you just love the comment from someone called Wildcat. As he/she didn’t provide a name or profession I have to assume that he/she is a financial planner or such. Accountants may not know the value of anything but at least they didn’t have to have Government enshrine legislation that they have to act in the best interest of their client!! George Lawrence Chartered Accountant Bowral NSW.
I work daily with accountants and the one’s I choose to work with are technically quite good, however one thing you can almost universally say about accountants is:
‘They know the cost of everything but the value of nothing’.
This article is correct in its assertions and accountants are likely to flock to the cheapest provider. The results of thus may well not be pretty.
If you worked hard to build your accounting practice and you don’t want to see your clients raped and pillaged by these spivs, do NOT do a deal with a dealer group for your licence, or enter into a JV with an FP group who will undermine your trusted client relationships and pick your clients bones clean with wasteful “looking after” fees.
They might offer you 50% of the take, but really you are just selling them your own goodwill early, because they will shaft you in the end anyway.
Spot on with one correction. The groups will want accountants to SELL SELL SELL now, not in a few years!! So the question then is: what can accountants do other than get their own licence?