Is CPA Australia’s financial planning venture an assertive move to lift industry standards or an act of post-exemption self-preservation?
When one of the peak accountancy bodies, CPA Australia, announced earlier this month that it would be establishing a wholly-owned financial planning business, CPA Australia Advice Pty Ltd, it was not breaking new ground in terms of an industry organisation or professional body opting to pursue a commercial operation.
Those with not so long memories will recall that the Association of Independently Owned Financial Professionals (AIOFP) established a platform offering in league with Westpac/Asgard — Personal Choice Private — for use by its membership and, as will be the case with CPA Australia Advice, it is a matter between those organisations and the Australian Taxation Office (ATO) as to how ownership of these commercial operations impact their tax status.
But whereas establishing Personal Choice Private was more likely to assist than hinder the commercial interests of members of the AIOFP, the same arguably cannot be said of CPA Australia establishing its own financial planning business.
There are many accountants who have established highly successful financial planning businesses and, indeed, many of the financial planning dealer groups currently in existence owe their establishment to people with accountancy degrees who are and always have been members of CPA Australia or the Institute of Chartered Accountants.
It may have escaped the attention of CPA Australia but one of the most significant dealer groups owned by the Commonwealth Bank, Count Financial, owes its existence and its framework to an accountancy background, and firms such as Centrepoint Alliance, Matrix and Premium Wealth Management can each point to member firms with significant accountancy ownership.
So what CPA Australia must ask itself is what impact will the establishment of a planning operation have on those members already operating in the financial planning space and, in particular, those which are operating under the own licenses.
And it is worth noting that CPA Australia, in announcing the establishment of CPA Australia Advice, cited its compliance with APES 230. It is worth noting that fact because of the tortured route that was followed in arriving at the final shape of APES 230 and the manner in which some of the earlier iterations failed to reflect the day to day commercial realities being encountered by accountants/planners.
Those examining CPA Australia’s intentions might also reflect upon the media release issued by chief executive of the new company, Alex Malley, who has stated that the operation will “set a new benchmark for professional and ethical conduct in making independent financial advice available to all Australian consumers”.
While it is, indeed, true that CPA Australia has an extraordinarily good reputation with respect to pursuing professionalism and good conduct, any examination of some of the worst of the financial services mishaps and collapses which have occurred over the past decade will reveal that accountants have not always emerged with clean hands.
Indeed, there are any number of investors in agricultural Managed Investments Schemes who will attest to never having spoken to a financial planner but to having become involved on the advice of their accountant and in pursuit of generous tax deductions.
Perhaps just as importantly, accountants were also seen to have been a part of the advice which saw investors lose money within the Trio Astarra debacle.
What CPA Australia should also be aware of is the fact that the vast bulk of recent mergers and acquisitions activity within the financial services industry has entailed accountancy firms either taking equity in or fully acquiring financial planning outfits.
So what, precisely, does CPA Australia believe it will achieve and does it risk simply getting in the way of market forces?
The reality, of course, is that the new limited licensing regime which replaces the so-called accountants’ exemption is the primary motivator for the CPA Australia move. It is nothing more, nor less than an effort to retain the loyalty of accountants who might have been attracted to the AFSL offerings of planning groups and, by default, the offerings of planning organisations such as the Financial Planning Association and the Association of Financial Advisers.
Mike Taylor is the managing editor of Money Management.
