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Time to end the turf war
Accountants and planners are continuing to draw the battle lines to mark their territory in the SMSF sector, but to their own detriment.
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
- securities
- 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
I see this debate time and time again.
If you are a planner who refers your client to an accountant, you want to keep total control of the client without relinquishing the principal advisory role.
As an accountant referring to a planner, it works exactly the same way.
This is why I have two seperate corporate entities helping like minded professionals with the "missing advice" of their core business.
This way the referrer always keeps control however has a FP or Accountant to help them with the missing link.
As Liam suggests, it is all about having a team of professionals in different disciplines to service the clients needs.0- George the problem is everyone has a different level at which they feel comfortable advising a client but the line in the sand as to what constitutes product advice has to be drawn somewhere. If you Recommend to a client to transfer or rollover funds to the SMSF then you should be subject to the same rules as myself and be required to do a full comparison in writing of the 2 options and the risks and advantages of making that move including loss of insurances, differences in fees, diversification ,liquidity, management, risk tolerance.
A fair level playing field for all so each can decide the extent of their service offering and if they should liaise with another professional or not.0 - Liam has made a good point but I think he has missed the real issue. Accountants do not want to be what he calls the "principal advisor". We want to be able to do what we have always done and that is to advise clients on the efficacy of a SMSF. A planner has not known the client as long as we have and this has resulted in some terrible recommendations. I, as a chartered accountant, am very happy to refer my clients to a planner for specific financial advice for which I am not licensed to provide. I can draw up a financial cash flow as well as any planner but I can't (and don't want to) recommend what specific items the SMSF invests in. George Lawrence Bowral NSW0
- Hi Liam
That's a pretty good and balanced assessment of the state of play.
At the risk of seeming pedantic I'd like to suggest the last sentence be reworded to read "...as a profession" rather than .."as an industry".
Ultimately if a client's two advisers are to work together it must be in a spirit of collaboration, mutual respect and the client's best interests at heart.0 - don't blame the accountants and financial planners. blame the professional associations. since FSR 2002, this Turf war has been a problem.0
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