The case of CPA Australia’s slow-progressing dealer group business offers a chance to reflect on the real game-changers impacting strategic financial advice.
As reported by ifa, CPA Australia Advice has failed to gain significant traction despite receiving 600 expressions of interest from advisers and advice groups and investing millions into the business.
It is interesting to ponder the factors leading to the failure of the CPA advice arm, but maybe the real question should be ‘what differentiates a CPA financial adviser from that of any other dealer group?’
On face value, the idea of a financial planner aligned with CPA Australia appears to offer clients a service that could simplify a client’s financial life.
The potential of synergy between forward-looking strategy accounted for by an accountant when optimising the client’s tax returns, insurances and superannuation.
For business owners, accountants could account for their personal strategies in the business and tax planning processes.
CPA calls out the following aspects of its model as “game-changers” in personal financial advice:
- A focus on what’s right for the person seeking advice – not what’s financially beneficial for the adviser;
- Independence of advice; and
- Community standing and trust in accountants.
We argue that the first point is the only one with substance.
While very important goals, ‘independence of advice’ and ‘trust’ are hardly “game-changers” of personal financial advice in Australia.
Either way, is there sufficient benefit to an adviser considering joining the CPA Australia Adviser Group?
More importantly, is this sufficient benefit for a client to use a CPA Australia Adviser?
It is to be noted there are a few exceptions, but by and large accountants are not seen as interested in a client’s personal financial life except at tax time – it is messy.
Let’s face it, accountants, traditionally, are historians, accounting for past activities rather than playing an active role in a client’s personal financial life. This changes somewhat when clients are also business owners; with cash flow forecasting needed for financing; or where significant personal assets are tied up in businesses or self-managed super funds.
Getting involved in personal financial strategy is a big bridge for some accountants to build. While not impossible, it is a hurdle nonetheless
The second challenge for accountants is offering a “fee for service advice model”. It is arguable that accountants struggle with this concept even now.
How many accountants sell advice only without product?
Their products are superannuation funds, tax returns, profit and loss statements, ASIC returns. Some brave accountants tackle business planning and cash flow forecasting, but these are hard pieces to sell outside of bank finance applications.
Why? Because it falls into ‘advice without product’.
The real game-changer
Advisers (whether they are accountants or financial planners) will continue to struggle to truly transition to fee for service that is independent of product advice unless they get knee deep into a client’s personal financial life.
Advice focused on really solving the challenges that are holding their clients back from making real financial progress.
There is a great opportunity for financial planners and accountant advisers who are:
- Focused on advice that improved the everyday financial lives of ordinary Australians;
- Actually strategic – drilling deep into what is stopping clients from getting ahead;
- Utilising technology to track, manage and report on the cashflow outcomes created from this overall advice process;
- Don’t shy away from the “pre-advice” challenges, but assisted clients to remove hurdles, like debt and spending habits;
- Providing their clients with outsourced management of budget and cashflows, to lift financial stress; and
- Providing their clients with outsourced ongoing coaching and structure designed to manage spending, and support clients over the long-term.
A service such as the above would truly offer differentiation from what is largely offered in the advice market and would offer great opportunities to clients, advisers, CPA Australia and its partners.
For CPA Australia’s financial planning arm to succeed, they really do need to come up with a value proposition that differentiates them from the rest of the financial planning market. Offering the same services that are already available is not doing this.
Australians are in desperate need of assistance in relation to their everyday finances. Massive numbers of people are in financial stress, and there are even more who will be should interest rates rise. For a financial planning group to be struggling amid all of this opportunity indicates to us that their focus is still not in the right place.
Bill Butler wants to help financial advisers to solve this problem and enact the real game change. We would welcome an audience with Alex Malley, or any member of the CPA concerned with the CPA Australia financial planning arm's direction, and of course we wholeheartedly welcome discussion with strategic financial planners ready to tackle this messy challenge.
Stephen Mitchell is the business development manager at Bill Butler
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