One of the often quoted reasons for the so-called ‘great divide’ between accountants and financial planners is that they have different cultures.
The perception of accountants is that they are conservative — even boring — but credible, prudent and independent. What they lack in creativity and sales skills, they make up for in technical competence.
Planners are more pro-active. At best, they are big picture strategists and creators of wealth.
How can the situation be resolved to get the most out of the respective strengths and weaknesses of accountants and financial planners?
Accountants have been bombarded by dealer groups and financial planners telling them of the extra revenue they might generate from collaboration.
Often just too busy to focus on the opportunity, accountants have also wanted to distance themselves from what they perceive as sales-oriented planners and have objected to financial planners stepping on their toes by giving different advice.
Financial planners should view accountants’ reputation for prudence and conservatism as a strength, not a weakness.
In my experience, when an accountant is enthusiastic about clients preparing a complete financial plan, there is very little resistance from the client. In fact, it speeds up the entire implementation process.
For their part, accountants would do well to associate themselves with the wealth creation and lifestyle approach which financial planners bring to their client relationships.
Fundamentally, both the accounting and financial planning professions need to recognise that the combination of accounting, taxation, investment planning, superannuation and estate planning cannot be done piecemeal.
If the accountant is arranging the situation so that one spouse is asset-poor for litigation protection, while the financial planner focuses in on gearing and wealth-creation strategies that put assets back into the name of that same spouse, the results can be disastrous.
If the approach is not integrated, the client quite simply will not get good service.
Ultimately, he or she may end up sacking both the financial planner and accountant and going to somebody who can manage both sides of the process.
The key is a commercially viable relationship.
Depending on the circumstances, this may be established on a year-to-year basis or — looking longer term — structured to maximise the exit value for shareholders in the accounting firm.
Potentially, there is a huge return on investment to be made.
Managed properly, any joint venture should be able to deliver a 25 per cent income return on investment plus a huge amount of capital gain.
It is a great opportunity for financial planners to start thinking about being the ‘big brother’ and buying the controlling share in accounting practices.
Think back: this is a massive change from the 1990s when accounting practices typically held onto control.
Martin Kerrigan is chief executive of Snelleman Tom Consulting Accountants & Snelleman Tom Financial Services. He will speak on this subject at the FPA Annual Convention & Expo 2004, December 1-3, at the Sydney Convention and Exhibition Centre, Darling Harbour. For more information, log onto www.fpa.asn.au.
