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Referral relationships 'part and parcel' of licensing process, says industry expert

One industry expert has indicated that referral arrangements with financial planners will be a vital part of many firms' operations after the end of the accountants' exemption.

Professional Development Mitchell Turner 20 April 2016
— 1 minute read

Kath Bowler, CEO of Licensing for Accountants, has indicated that there is some confusion surrounding the referral arrangement process within the accounting industry, particularly as the end of the accountants' exemption draws closer.


"Unless you're planning on moving fully into the financial planning space, you're going to need a solution of some kind," Ms Bowler said.

"I don't see the referral relationship as an alternative [...] I see it as part and parcel of almost every accountant's licensing options."

According to Ms Bowler, accountants need to have an understanding of investment strategies they are comfortable with their clients undertaking before they decide upon a referral partner, to minimise potential conflicts of interest.

"A lot of the time, I don't think an accountant thinks that they need an investment philosophy, because they're not doing investments."

Ms Bowler added: "They do need to have a philosophy that they believe in, whether that's property, direct investment or managed funds, because if a client is looking for guidance, you are effectively giving it to them by referring to a planner that invests that way."

Ms Bowler noted that far too many accountants are not proactive when it comes to understanding the advice that a financial planner may provide a potential client as part of a referral arrangement.

"I always tell accountants to actually ask for a copy of the statement of advice that is going to be sent to the clients, just for your own sake. It astounds me how often accountants don't even look at a sample."

She added: "Ask to see a typical statement of advice that would be given to a client that is seeking advice on a self-managed super fund, or to a client in their 50s who has a lump sum – just so you can see it and have that comfort level."

"I think if accountants do their homework at the start, they will avoid problems further down the track and it will give them more comfort when they refer their clients later," Ms Bowler concluded.

Referral relationships 'part and parcel' of licensing process, says industry expert
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