After the Commonwealth Financial Planning scandal, the public attitude towards advisers turned sour, but accountants retained their trustworthiness, Sophie Grace compliance director Sophie Gerber said in an article published by ifa sister title SMSF Adviser.
“The relationship of trust between accountants and clients has remained very strong over a long period of time, quite removed from the deterioration experienced by financial planners and finance firms,” Ms Gerber said.
“Trust is the key ingredient in winning clients in financial planning.”
In coming years, she predicted the advice industry would seek to improve its public face by shifting towards “new business models which do not rely on conflicted remuneration and product sales to survive”.
“In practice, this will mean that advisers do not take commission from financial products and instead charge their clients a fee for service (in the same way that doctors and lawyers do),” she said.
This trend could create an opportunity for accountants, whose established network of clients are already accustomed to paying a flat fee, according to Ms Gerber.
“The fee-for-service model is a completely new form of client relationship for existing financial planners,” she said.
“Transitioning to the model will be challenging for them [advisers] as they seek to demonstrate their value to clients.”
She also suggested higher educational standards would favour accoutants over most advisers.
“An outcome of the next anticipated round of reforms is that financial planners will be required to be degree qualified,” she said.
“Not all of the existing financial planners fall into this category, but as an accountant, almost 100 per cent … would fit the bill.”
About 20% of accountants in my experience are just bloody incompetent, qualifications or not. Another 2% are just unethical, and I have seen more accountants than advisers sent to jail over 25 years.
Accountants have un-authorised opinions on everything. How can they advise on life risk when they know nothing !!!
I say abuse of the trust is getting more common.
BTW-is there an ethics certificate in the Degree package.
If accountants had to provide a Statement of Advice, working papers with two alternate strategies, and a comprehensive fact find…..I wonder how much their fees would increase and how much extra revenue the govt would lose through deductible accountants fees. It will never happen.
Strategy only advice or advice that doesn’t involve product replacement etc should be exempt from SOAs, particularly for advisers with high level qualifications and/or years experience. Treat us like professionals please…or this rot will never cease.
Just make like Taylor Swift and shake it off, planners. Keep doing the good work you do.
I’m getting tired of all the tabloid trash that I read about our industry. If it’s not the politicians having a go it’s the press or hang on, anyone else, Accountants and Lawyers roll up roll up. Nice.
I’ve lost count of the number of people I have met with SMSF funds with a balance of less than a $80k sometimes all in cash and when asked why do they have an SMSF…? “My accountant said it was a good idea”. Hmm
My fear for our industry is that the many good Planners (and there are many) will only put up with so much of this tripe before they get fed up and leave our industry. This has the potential to have a very negative affect on retirement savings, the end result of; A), higher costs for future governments to support the aged (more social issues due to lack of money to survive)and B), lower quality of life for our aged.
It’s time ‘You All’ start talking about all the good we do.
Know this. We make a positive difference to peoples lives.
Trust is important, but it also takes a fair amount of skill and knowledge to convince a client they need to engage in a large piece of financial planning work and pay for it. A short course on insurance and investments will not cut it. If you don’t know your stuff, the clients will see straight through the accountant and trust will quickly evaporate.
Spot on Gerry. An ill informed and defamatory statement. No need to go further, we all know there are terrible adviser in accounting and legal profession- they just don’t get reported in IFA communication. Cheers
Accountants may hold the PR upper hand for now, but once the property bubble corrects, they will come in for some serious scrutiny. Accountants who advise their clients to switch their super to an SMSF that the accountant charges fees to administer, are just as guilty of conflicted remuneration as old style commission based planners. And those that advise their clients to use the SMSF to borrow and buy property, so the accountant makes more fees from the trust setup, are even more guilty of conflicted remuneration. If their clients are anything other than wealthy risk takers, then those accountants are probably also guilty of highly inappropriate investment advice. The day of reckoning is nigh.
Was this written 10 years ago?
The fee for service model is NOT a completely new form of client relationship for existing planners. Many have been doing this for many years. Generalisations in any profession are harmful, and this type of article is not helpful at all.
Sophie Gerber, Lawyer, giving advice on ethic and representing value. What a joke. For one Lawyers most act on no win no fee then take 30 and 40% of settlement. Thats far and certainly represents value! Now to accountants how quickly we forget about all the tax driven agriculture shambles they all recommended receiving up to 10% commission. And finally the greater majority of qualified professional planners already charge flat fees and have no problem demonstrating value. Lets start focusing on the positives of advice as it seems no every report on this. IFA your articles are getting closer and closer rubbish every day.