Having facilitated M&A activity in the sector, John Birt of Radar Results says convergence between the two professions is still only in the earliest stages.
“Over the next decade, Radar Results believes the accounting industry will fully embrace financial planners, taking over and merging with many financial planning practices,” Mr Birt said in a communication issued yesterday.
“And, in reverse, many financial planners will want to acquire accounting practices, leading to purchasers paying an increased price multiple,” he added.
Accounting practices make appropriate acquisition targets for entrepreneurial advisers as they often operate on a fee for service basis and are therefore likely to be compatible with Future of Financial Advice requirements and be unaffected by grandfathering concerns.
However, in order for businesses to take advantage of the trend, financial planners and accountants need to “kiss and make up” and put recent animosities in the past, Mr Birt said.
“With some financial planners looking to provide taxation advice and needing to undertake further education to qualify themselves to do so, some media reports reveal a rift developing between these two professions,” he said.
The broker said that since the 1980s, accountants have “looked down” on financial planners, often in response to perceptions of poor advice received by common clients.
Mr Birt said the financial planning industry has come a “long way since then” in terms of education levels and disclosure practices.
Will financial planners and accountants bury the hatchet? Have your say below
@ ang….be careful there cowboy,you might want to step down off that high horse of yours – equal footing when you stand on the same floor, and then we can properly espouse each other’s great points and work together for the client and our businesses.
lets not get too carried away with the no. of pieces of paper or how long and all the other stuff – you don’t get your emotional intelligence from an educational institution.
the papers only satisfy the relevant regulator that you have some formality to enable you to get under way – it doesn’t mean you are actually good at it?? your clients will decide whether you’re good at something or not.
the actual answer is to work symbiotically with like-minded people that put other people before themselves – technical is only 5%, the rest is EI….
I like the bit about higher multiples.
We just bought an accounting practice in Adelaide to click my advisory business onto.
it will take at least 10 years for F P to be on par with accountants, the reason being is until you raise the entry bar to a degree & FPA status, & move from a perception of FP being sales role. So far many FP believe Dip Fin serv is asatisfatctory qulificayion, its not. to be treated as an equal you need to have the experience & the qualifications
I think the continued “meshing” of professional firms is inevitable for two key reasons.
1. Clients will seek to achieve their professional advice needs in as cohesive a fashion as possible and consequently practices that are positioned to deliver a range of services with high capability will be favoured and
2. The drive to be more effective and efficient to compete in an ever tougher environment will encourage and reward practices who create this leverage through scale