Accountants and Financial Planners – Consolidation of business practices
The inevitable consolidation between accounting practices and financial planning practices is not a new concept. However, the timing is gathering pace according to many well known industry sources leading many to speculate the next 5 years will see a dramatic merging of traditional financial advice and tax accounting business models into a ‘one stop’ financial advice shop. A key reason is the structural change occurring in the financial planning industry. That change is the regulation to ban commissions for any financial advice relating to any investment or superannuation products aside from personal insurance. Please see my previous blog for why regulators such as ASIC have allowed insurance providers to continue paying commissions here. Back to the story now. Because nearly all financial advice (other than insurance advice) will be offered on a fee for service basis, financial planning advice and accounting advice will increasingly start to look very similar.
Shifting business models
Many accounting practices are moving to incorporate financial planning as an additional service offer to their existing clients. Its logical enough. They were already setting up the SMSF so why not get paid to advise on it. Of course financial planners see this shift in focus as a direct threat. So what do financial planners do? They become accountants of course! Many financial planners are keenly aware their existing clients are either about to be offered a free appointment to sit down with their accountant’s “in-house financial planner”, or are aware there is a likelihood this will happen in the future are taking matters into their own hands. Financial planners have entered into formal joint ventures with accountants to offer an end-to-end advice service incorporating financial advice and tax advice at a frenetic pace in recent times. Alternatively, some financial planners are opting to actually start an accounting firm from scratch within their existing firm by hiring qualified accountants and in some instances just buying accounting firms outright in order to achieve their aims. Either way there is a fierce land grab going on, and the stakes are high. And so the future road of advice (whether it be tax, super or investment) is becoming increasingly blurred as financial planners start to offer accounting services and vice versa.
Unfortunately for accountants and financial planners, the land grab is not just a two-horse race. I heard in the last fortnight that Mortgage Choice, a traditional mortgage broking business previously only offering mortgage advice has just applied for its own Australian Financial Services Licence (AFSL) and will be offering financial advice in 2013 under the brand “Mortgage Choice Financial Planning”. The plot thickens!