Market trends will inevitably force greater convergence between financial advice and accounting practices, with advisers adopting modes of behaviour and conduct more in line with established norms in the accounting profession, according to a new white paper developed by publicly-listed accountancy-based planning firm, CountPlus.
The whitepaper, based on research undertaken by CoreData, argues that between now and 2024 the financial planning industry faces several critical challenges, with fault lines having already emerged within the underlying business models of certain financial advice businesses, “notably those residing within larger, vertically-integrated financial institutions”.
“Some may withstand additional shocks, while others are likely to succumb to these new pressures and simply disappear,” the whitepaper said.
It said that accounting firms that provided financial advice were likely to flourish as consumers increasingly sought out independent, highly-educated advisers who are free from conflicts of interest.
“As some financial advisers leave the industry, being unable to meet new professional and educational standards, the deficit will be filled by professional accountants, in whom the public holds greater confidence,” it said.
“The data is clear: The question is how likely is the service provider to act in your best interest? This behaviour (acting in a client’s best interest before the providers best interest) is the most powerful driver of trust. For accountants the score is 82.3 per cent of mass affluent Australians agree, for advisers the score (post Royal Commission) 41.2 per cent.”
“The findings in this White Paper are supported by research prepared for CountPlus by CoreData in the CountPlus Market Intelligence Report which concludes that the combined effect of regulatory changes and consumer demands for better services and transparency will be to push financial planning ever-closer to its desired status as a profession, converging with the accounting profession,” it said.
What is more, the whitepaper said the push had already begun for quality financial advisers to migrate away from the major institutions and to small independent businesses including accounting firms.
“As a result of this transformation, the market dominance of vertically integrated financial firms will, in all likelihood, diminish,” it said.