Accountants offering financial planning services may have the upper hand over specialist advisers due to the advice industry’s poor reputation, a financial service lawyer has warned.
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.”
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