Accountants, often the first port of call for clients wanting finan-cial advice, are moving swiftly into financial planning.
Accountants, often the first port of call for clients wanting finan-cial advice, are moving swiftly into financial planning.
“Accountants have a lot of experience behind them. You can guarantee that they’ve got a degree, and they’re probably already involved in financial planning, so they can give you the whole picture.”
So says Maruta Rodan, spokesperson for financial planning and educa-tion at the Institute of Chartered Accountants of Australia (ICAA).
While these may be the sort of comments you would expect from the in-stitute, there is no doubt that an accountant’s role is changing, just as a financial planner’s role is.
In fact, barriers between the two occupations are blurring, as many accountants move to equip themselves with planning accreditation to provide their clients with holistic advice on a range of financial and legal issues.
Many have noticed that while the grass isn’t necessarily greener on the other side, it certainly wouldn’t hurt to knock the fence down.
What can accountants offer their clients in the way of financial planning? Everything, say the two peak accounting groups in Austra-lia.
“The advantage of someone with an accounting background moving into financial planning is the training they have up their sleeve,” says Brad Pragnell, superannuation and financial planning consultant with the Australian Society of Certified Practising Accountants (ASCPA).
“They have a university qualification, and a strong grounding in ar-eas such as taxation and business structure, particularly taxation. The problem with many financial planners is they can’t see this as part of the big picture,” he says.
Increasingly, accountants are starting to offer financial planning services. In a survey by the ASCPA’s Financial Planning Centre of Ex-cellence last year, 31 per cent of the 5600 members surveyed held a proper authority. Also, 75 per cent said they thought financial plan-ning would become more important in the near future.
“The survey responses are pretty overwhelming. There’s been a real explosion in CPAs getting involved in financial planning,” Pragnell says.
As part of a strategy overhaul, the ICAA also has tried to gauge the level of interest their member accountants have in financial plan-ning.
At present, the group is tightlipped about its findings, but says these are being discussed by special interest groups across Austra-lia. The chairpersons of these groups will report to the institute’s national body in coming months – a move which should result in a fi-nal ICAA strategy to be unveiled later this year.
“At the moment, the institute is involved in a very active and pro-ductive member consultation process, after conducting exhaustive mem-ber surveys,” Rodan says.
She says demand for information on financial planning is rising as recognition of the potential of this area of business spreads.
“I think financial planning is an area of growth. Recent government policies in financial services are complicated and there is a growing emphasis on self reliant retirement. Unless you are an expert on these matters yourself, you’ll go to someone else,” she says.
Accountants, in the frontline of client services, are keen to provide the one-stop shop.
In response to growing interest, the institute has set up its own three day ASIC-approved course in financial planning. After complet-ing it, accountants can gain a proper authority through the normal channels.
The idea is to give accountants training in financial planning with-out the information being tied to any particular dealer group, Rodan says.
“The institute’s course provides people with information in a non-pushy way, and the end result is not pressure to join a dealer group. The course actually equips accountants with a means to choose the right licence holder,” she says.
The length of the course takes into consideration an accountant’s educational background and is exclusive to institute members.
“It’s not available to people walking in off the street. It’s a short course that picks up on some of the more technical aspects of finan-cial planning,” Rodan says.
The course recognises that accountants already possess prior qualifi-cations in the area of giving financial advice. ICAA members are re-quired to hold a degree qualification and the professional equivalent of a postgraduate year, the PY.
Demand for the course has been high. In the past two years that it has been offered, about 400 institute members have graduated. The course, held in each of the states once or twice a year, is fully subscribed each time, Rodan says.
It must be noted, though, that institute members who want to move into financial planning are not required to take this route, and are free to gain financial planning accreditation through the Securities Institute of Australia, the Financial Planning Association or through any established dealer group.
Other financial planning initiatives run by the institute include a question and answer workshop, which is usually attended by those toy-ing with the notion of moving into offering financial planning serv-ices, and an e-mail newsletter on superannuation and financial plan-ning. The newsletter, Retirement Income Alert Today, goes out weekly to 1400 member subscribers.
The ASCPA took a slightly different tack with its members, and intro-duced a Professional Financial Planning specialist designation for members in July. In order to gain the accreditation, members have to have either five years practical experience in the area or three years experience combined with four units of an ASIC accredited course.
“The designation is for members who want to make a commitment to spe-cialise in financial planning. We are generally looking at people in more senior positions who want to gain a proper authority or a dealer’s licence in their own right,” Pragnell says.
He describes the response received so far as “considerable” and says he is fielding several calls a day on this alone.
ASCPA has created the Financial Planning Centre of Excellence which operates as a society’s think-tank and research component. It was re-sponsible for the member surveys on financial planning and it pro-vides a forum for members working in financial planning to air their concerns or seek advice in this area.
The centre also acts, in conjunction with the society’s executive, as a lobby group, preparing submissions to governments on proposed leg-islation such as CLERP, Pragnell says.
Both accounting bodies say that there is a need for information on financial planning among their members, and both are finding that de-mand is increasing. The effect of this on the current industry could prove to be another blow for planners waiting for client referrals from accounting firms.
If the moves into providing financial planning accreditation and edu-cation by the two bodies are anything to go by, we will be seeing many more accountants starting to offer financial planning services in the near future.
