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Accountant or adviser? The risk of trying to do it all

The future of accounting involves a broader array of financial services, but that doesn’t mean accountants should try and do it all themselves.

Insights Greg Holman, GPS Wealth 13 May 2017
— 3 minute read

The traditional accounting business model is dead. The advent of user-friendly, cloud-based software and low-cost, small business-focused bookkeepers has destroyed up to 40 per cent of traditional accounting firms’ revenue. Compliance, once the core focus of accountants, is now a commodity.


Financial planning advice is a naturally complementary service that can fill the gap yet half of all accounting practices remain caught in a time warp. Clients are now demanding more value-creating services from a one-stop shop.

Those small accounting firms who ignore the opportunity will find their businesses dwindle into insignificance over the next five years. But while the accounting business has changed, the trusted role of the accountant as a facilitator has not.

This is a key reason why accountants who work hand-in-hand with a specialist financial planner will succeed and those who attempt to become a qualified financial planner will fail.

An alignment of skills and culture

It’s impossible for one person to offer clients high-quality, personal accounting and financial planning advice. They may be complementary skill sets but they’re becoming increasingly specialised.

There are just not enough hours in the day for one person to keep on top of tax planning, asset structures and businesses management issues as well as investment strategy, insurance, and how to maximise the value of government payments such as the age pension.

This is exactly what plays out in practice. Take a closer look at businesses where the accountant has become a financial planner and you’ll find that the financial services revenue is miniscule. It’s like a sportsperson: you can’t be a professional footballer and a cricketer – you need to give one up.

The end of the accountants’ exemption has also drawn a clearer line between the two professions. While many accountants still need to make a decision, approximately 9,000 accountants are now referring SMSF clients to a planner, according to Investment Trends.

This is the clear answer – refer clients to an expert financial planner working in-house or externally. It can better meet the needs of clients while also helping grow accounting practices.

That growth is being powered by a more aligned culture between accounting and financial planning firms.

The educational requirements of the accountancy profession have been long entrenched and respected. The financial planning industry is headed in the same direction with new planners needing to hold a degree from 2019 (another sign of specialisation).

Financial planners have moved from commission-based remuneration to fee-for-service, pointing the way for accountants. In the past, accounting firms have charged by time – a system that rewards the inefficient and penalises the efficient. Accountants are now also moving towards a fee-for-service model based on complexity of the job.

Counting the benefits

Accountants have a duty of care to their clients. By referring them to a skilled financial planner, they can help clients to become financially independent and ensure they and their families are covered if illness, injury or death strikes.

Unfortunately, clients who don’t receive this holistic service are primed to move elsewhere. Many accounting firms tell me they’ve previously lost clients to competitors offering a greater breadth of service. That’s why working with planners can put a fence around an accountant’s current client base and underpin long-term sustainability and growth.

As revenue from traditional compliance-related services continues to fall, revenue from referrals or through a joint venture can produce new income.

An old rule of thumb valued $1 of accounting firm revenue to $1 of capital value. Financial services firms were valued much higher: $1 of revenue equated to $3 of capital value.

Accountants are now realising that working with financial planning firms can turn $1 of capital value into $4. Likewise financial planners are keen to work with accounting firms for the same reason – there’s value to be unlocked.

This is why more and more accounting firms are looking to bring a financial planner in-house.

Making it work

The partnership between accountants and planners makes sense but it requires an accountant to open a discussion with clients about a financial planning service. This comes naturally to some accountants but many others find it difficult.

It takes ongoing guidance to become a facilitator. The conversation should start with a whiteboard to help draw a visual guide for clients until they reach that crucial ‘aha’ moment. The discussion should highlight four key areas illustrated in circles on the whiteboard:

• Tax: We can help clients legally minimise tax.

• Protection: We can help clients protect assets though companies, unit trusts, discretionary trusts and super funds where applicable.

• Growth: We can assist business clients to grow revenue, profits and the valuation of their company through our consulting services.

• Wealth: We have a financial planning division (or alliance with an external group) who can work with our clients to protect and grow their wealth.

This conversation can be an ongoing process. Clients come in once a year to see their accountant when they need their tax return completed, and this represents an ongoing touch point and opportunity to raise the value of financial advice.

The nature of accounting is changing. Those accountants who adapt will grow while those who ignore the trend – or attempt to do it all by themselves – will be inevitably be left behind. The choice is clear.

Accountant or adviser? The risk of trying to do it all
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Greg Holman

Greg Holman

Greg Holman (FCPA) formed Holman’s Accounting Group in Noosa 21 years ago. His firm was listed by BRW as one of the top 100 accounting firms in Australia by revenue and one of the top 10 fastest growing. In the late 1990s, Greg was joined by Rob McGregor and together they established an award-winning financial planning business. In 2012 they sold their accounting firm and launched GPS Wealth Ltd – an AFSL designed for accounting firms looking to embrace financial services as a key service offering. GPS Wealth was recently named Dealer Group of the Year by AccountantsDaily's sister publication ifa. It is also the 2015 CoreData Licensee of the Year.