Accountants branch out into financial planning
There are a number of options available to accountants wishing to branch out into financial planning. Adam McGruen outlines the pros and cons of each.
In an age where people are increasingly time-poor, many clients now look for a one-stop-shop for their accounting and financial planning needs.
This trend – along with the potential for significant uplift in revenue and business valuation – has led to an increasing number of accounting practices looking for help on the best way to integrate financial advice into their existing business models.
Relationships between accounting practices and financial advisers are nothing new – accountants and planners have long worked together with varying degrees of success.
Given the growing complexity of many clients’ needs, a successful partnership between accountants and financial planners makes even more sense, and the benefit it can bring to all parties is increasing.
So what makes these partnerships work? Often it comes down to addressing the foundations of success before the business looks to expand.
Five foundations of a successful partnership
Alignment of interests
Why are both parties coming together in the first place and how will the relationship become mutually beneficial?
Is the driver to build an asset, grow revenue and/or just provide better service to clients? Once this is agreed upon, then both businesses need to share similar values in the way they deal with clients.
Generally, it’s this client experience that attracts and retains clients in business, and therefore it’s critical that both parties share a similar way of dealing with clients.
Ideal clients and service offer
Assuming there is an alignment of interests, the next logical question when referring business is what type of clients does the financial advice business add most value to?
While some financial advisers offer holistic services, others specialise in a niche market – which may or may not match the needs of the accounting client base.
Experience and understand the offer
If both businesses are committed to creating an integrated offer, then accountants need to experience the end-to-end financial advice process – that is, go and see an adviser and learn what it’s all about.
This has two primary benefits. Firstly, accountants will know what their clients experience when they meet with an adviser and secondly, they can explain the process to clients, based on their own experience.
Referral process
How will the business introduce the relationship?
Will you hold a three-way meeting with the client, financial adviser and accountant?
Will the accounting business provide the adviser’s details to the client and have a follow-up mechanism in place?
Ultimately, this approach will have to be determined by both parties, but it’s important there is a defined process and it’s not something that is left to chance. The documented process can be refined over time but needs to be agreed upfront so there’s accountability for both parties.
Communication
Finally, the key aspect to any relationship is setting aside the time to have open and honest communication and do a ‘pulse-check’ on how the relationship is going.
In many cases, it’s accountants who hold the trusted client relationship.
As such, clear communication is vital. Things to consider include agreed turnaround times, the timing of client updates, how to agree process improvement and early identification of potential client activity.
Assuming all of these above foundations are present in the relationship and there is a clear commitment from both businesses to work together, then you should start to look at the best approach to structure the integrated one-stop-shop for your clients.
Businesses essentially have four options – each of which has its advantages and disadvantages.
Which path an accounting business chooses comes down to the needs of the business and often the approach may change and progress into a more formal relationship over time.
No single approach will be right for all businesses, but support and assistance is available from dedicated teams who work with accountants looking to explore these options.
They can offer financial advice on appropriate licensing solutions for accountants as well as tools to support integrated accounting and financial advice businesses.
While the Future of Financial Advice reforms have certainly brought about change, it’s important to remember that with change comes opportunity.
Adam McGruen is head of MLC New Adviser Development and MLC’s Accountants’ Advice Academy.
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