According to Ben Nash, adviser at Successful Ways and spokesperson for XY Adviser, the Australian government would be better off financially if clients were able to claim their advice costs back on tax.
“It does not seem to make sense that the government are doing a short-term tax grab by not making advice deductible,” he said.
“They are short-changing themselves in the long term.”
Mr Nash said tax deductibility would make advice more affordable, encouraging more people to employ an adviser and, in the long run, creating more self-funded retirees.
“Tax deductible advice would create a better outcome for society but also a better outcome for the government, where they do not have to pay out pensions or health-related entitlements,” he said.
Principal of Radar Results John Birt agreed that advice should be deductible, comparing advisers to accountants, whose services can be written off.
“I cannot see the difference between an accountant charging a fee for taxation advice and a planner charging for financial advice,” he said.
According to Mr Birt, advice may be even more important than accounting as it helps people prepare financially for retirement.
Unfortunately the comments by ‘ad’ highlight that most people do not understand what a real financial adviser does, which is to provide solutions for clients to achieve their long term financial and lifestyle goals. Naturally products result as most people have super or require insurance cover. To say that financial advice is “sales product flogging trying to justify its strategy” simply shows ignorance, and is also inaccurate and offensive to the large number of quality financial advisers. I have met many accountants whose advice is poor quality, but because they are only selling their low quality service instead of a product this is somehow better?
We see that the majority of Aussies don’t have sufficient income producing personal investments to receive a deduction for financial advice, even though this advice is helping them achieve better financial outcomes in the future. There needs to be some recognition of this fact which IMO makes the case for deductible financial advice.
To be a tax deduction it has to be for income producing purposes the advice is prior to the event. its not as simple as you have highlighted. There is large difference in qualifications between an accountant & fin. advisor. i.e 3 year degree plus post grad. qualif. & years of supervised experience. Raise the bar first, become a profession. Thats why Fin. adviser we be considered as sale role from other professions until you raise the barriers of entry and yes you need experience & qualifications. Accounting is more than producing a set of accounts/ tax returns , its actuality strategic advice, the difference is one is a profession, the other sales product flogging trying to justify its strategy. i have worked it both areas I enjoy the Fin Advisor, but see so much product oriented advice. tax is important part of advice. You need to be qualified in both to give advice. Eg like getting a builder who can do the framing, but cannot build the rest of the house
Ongoing advice generally is tax deductible already. At issue is up front fees for establishing an investment which are considered capital just like stamp duty etc with a property. However it shouldn’t be forgotten that capital costs are deductible against capital gains so up front fees may well be deductible ultimately.
Progressive advisers often charge nil up front and are paid by regular trail for ongoing advice instead. Their clients are getting a tax deduction already. Assuming the client actually pays tax that is.
Common sense and totally true. Well said Ben Nash.
Unfortunately the Government will only see the short term cost not the long term gain. However this is definitely something the profession should band together and Lobby for. An issue worth uniting for.