A local industry head has said that financial advisers and accountants working together will help solve the issue of affordable and accessible advice in Australia.
On a recent episode of the ifa Show podcast, adviser and founder of digital solution Scientiam, Nigel Baker, discussed a recent opinion piece published on ifa in which he argued that the growing number of accountants in Australia (currently at 220,000) could serve as a boost to the advice sector.
On the podcast, Mr Baker said he sits in “both camps” being a financial adviser and a member of the Chartered Accountants Australia and New Zealand (CA ANZ).
“A lot of accountants don’t want to know about advice. A lot of accountants, as we know, have got into advice and some have done it well, some not so well,” he said.
“But what I’m saying, when we’re trying to solve this problem and say we want advice to be more affordable and accessible, well, you look at it and say, there’s 15,000 to 16,000 financial advisers left. They’re just not going to be able to deal with the demand.
“So, you’ve got tens of thousands of great accountants out there and they’re terrified as well to give advice. But we’ve got to make that a bit more accessible. Why can’t an accountant also have a discussion with a client around budgeting and saving, and things like that, within a framework?
“We’re trying to solve the problem for the end client, not have walls between different professions…”
Mr Baker acknowledged that there is contention to the idea, particularly that accountants should have to have the same education standards applied to advisers.
While he agrees that the framework should be similar, Mr Baker said the conversation must be about the benefits to clients.
“We’re talking about professionals helping people now. We’re not talking about products, we’re talking about giving people access to information and advice,” he said.
“Yes, at the end of the day, there might be a product, but I just think that’s a different discussion, as to in the past it was like, well, how can that accountant know all about these different types of products?”
Mr Baker’s appearance on the ifa Show came after ASV Wadeson Chartered Accountants co-founder and director, Jose Alguera-Lara, wrote in another opinion piece for ifa that both the advice and accounting professions are facing the same “war for talent crisis” with planners and accountants leaving the industry and not being replaced by new entrants at the same rate.
However, Quality of Advice Review (QAR) reviewer Michelle Levy recently raised concerns about creating exceptions within the advice regime and indicated a preference for a principles-based regime.
Speaking on a panel discussion on the QAR last week, Ms Levy commented on a proposal by some accounting bodies that called for legislative changes to enable accountants to be able to provide certain types of strategic advice — including SMSF advice.
“I have the concluded view that I don’t like exceptions. I think they are inconsistent with a principles-based approach, which is what I am preferring,” Ms Levy said.
“I worry about creating exceptions, and I think there needs to be a very compelling reason to do that.”
Listen to the full episode with Mr Baker here.
Accountants can tell their client to make an extra super contribution in an email after they have checked on MyGov what contributions they have already made.
Advisers need to either work with the clients accountant, or get the client to look on Mygov and tell them what contributions have already been made. Then the adviser needs to write an SOA or ROA with the advice, make sure it is compliant and then send to the client…wonder why advisers need to charge so much.
The whole reason there is a shortage of licensed financial advisers is bad regulation. If licensed advisers were given the carve outs and exceptions being suggested for accountants, there wouldn’t be a professional advice shortage in the first place.
And let’s not get duped by this myth that accountants are more likely to act in the client’s best interest. Licensed advisers are subject to a statutory Best Interests Duty. Accountants are not. Licensed advisers are subject to a regulatory enforceable Code of Ethics. Accountants are not. Licensed advisers are required to have university level training in financial advice disciplines. Accountants are not.
Actually accountants are subject to a best interest duty and an enforceable code of ethics that has been around for a long long time and regularly review and updated under an independent board! They also have had approved compulsory degree qualification requirements and then must compulsorily complete a post graduate qualification to attain their post nominals and then further education to attain a public practice certificate. Hardly a level playing field is it!.
Perhaps we could pivot the discussion to removing the Bad Legislation and talk about corrupt Public Servants working in ASIC and Treasury rather than trying to find a solution to bad legislation that won’t allow me to meet and resign an ongoing fee arrangement with a client on Monday due to the anniversary date being on a Tuesday.
I have been in an Adviser & Accounting close business relationship for 21 years and truly believe our clients get the best results being able to have good Advice and good Accounting working together for the client. It’s really the only way to provide a great overall service.
But it’s not about Accounting exemptions or other strategic advice exemptions, or more rubbish Intra Fund sales etc.
[b]ITS ABOUT A MASSIVE 50% plus REDUCTION IN ALL THE EXCESSIVE BS GOVT ADVICE REGS AND RED TAPE. [/b]
Stop looking for small solutions, partial solutions, they wont work.
It’s a massive get out of our Advice faces & lives to Govt or the whole system fails more.
Let’s address the naivity of Mr Baker:
[i]Mr Baker acknowledged that there is contention to the idea, particularly that accountants should have to have the same education standards applied to advisers.[/i]
In order to be a Doctor, you need to have the actual qualification, not some alternative health qualification…
[i]While he agrees that the framework should be similar, Mr Baker said the conversation must be about the benefits to clients.[/i]
Wrong conversation mate, the conversation needs to be around removing BAD LEGISLATION AND ROGUE ELEMENTS pertaining to the regulations.
[i]”We’re talking about professionals helping people now. We’re not talking about products, we’re talking about giving people access to information and advice,” he said.[/i]
So the key carve-outs accountants are looking for is in the SMSF arena – which is deemed to be a product itself…so we are actually talking about products contrary to Mr Bakers assertions…
As I’ve said before:
When accountants recognise that buying an unnecessary luxurious car at tax year end is not great financial advice but tax reduction advice that results from a loss in income – then I might be less sceptical.
When accountants STOP recommending to their clients (who have Income Protection in place) to convert all their income into dividends (hence income of $0 x 75% = $0) then I might be less sceptical.
I’ll leave the sophisticated tax work to the accountants – they;re great at it…it’s time accountants left the financial planning to financial planners…