I question whether accountants and financial planners are making too much of the ‘us versus them’ debate in the quest to mark their territory and secure the mantle of ‘principal SMSF adviser’ to their clients. Many rush to point out the flaws in the other’s business acumen and ethics without first making sure they understand exactly what each brings to the table for their clients.
I have seen the good and the bad of each discipline. I have seen financial plans aimed at product solutions but with no real focus on strategy and structure options available to the client. I have also seen accountants set up multiple entities on the basis of a brief annual review of financials - leaving the clients high and dry when it came to strategy implementation.
What has become clear is that a lot of new accountants with no existing financial planning experience have no real idea of what a true financial planner does. A lot of accountants are also tainted by experience with investment-focused advisers or “product pushers”.
What has also become clear is that proactive accountants really can control the territory as primary adviser to clients if they make a concerted effort to step out from behind the numbers and engage the client in business and wealth planning.
However, what is becoming most obvious is that we planners and accountants alike want clients to succeed in their objectives. We all know a long-term client is the lifeblood of any successful business. It’s becoming increasingly pertinent that accountants and planners end the turf war to ensure these long-term clients are kept happy.
Where to from here?
What most clients actually need is a ‘hybrid adviser’, with the accountant’s tax knowledge and financial engineering capabilities to make the most of the current opportunities, but also with the financial planner’s ability to make them step out of their comfort zone and consider future needs and provide an effective plan for funding their financial goals.
There are certainly a few practitioners within the SMSF sector who can manage all these roles. What is probably a more sustainable proposition is for a team of professionals in different disciplines to service the client’s needs.
The limited licensing regime, announced in 2012, presents an opportunity to start stepping towards a blended practice. From 1 July 2016, the accountants’ exemption will be removed. Any accountant who wishes to continue to provide SMSF advice to their clients from 1 July 2016 must be appropriately licensed with an Australian Financial Services Licence.
The new limited licence allows an accountant to make recommendations in relation to the client's existing superannuation funds to the extent needed when making a recommendation to set up an SMSF or when providing advice to clients on contributions or pensions.
Accountants (or other advisers) who hold the limited licence will be authorised to provide financial advice on SMSFs on what is termed “class of product” advice which does not involve any specific product recommendation. So, for example, they can advise on:
- superannuation products
- simple managed investment schemes as defined in the Corporations Regulations 2001
- general and life insurance, and
- basic deposit products.
If accountants want to offer a service that provides specific product advice, like a select portfolio of shares, bonds and property trusts then they will need to be fully licensed, partner with a fully authorised adviser or outsource the portfolio design and management which is becoming a popular option.
If we drop our weapons and work together as an industry, with the clients’ best interest in mind, we have a recipe for business success and client satisfaction.
Liam Shorte is a director at Verante Financial Planning