FPA faces a new challenge from accountants
With accountancy body the National Tax and Accountants' Association setting up a financial planning arm specifically aimed at getting accountants back into the advice space, Mike Taylor writes that the FPA will face further challenges.
A new battlefront opened up last week for the financial planning industry, with the first shots being fired by the National Tax and Accountants’ Association (NTAA) when it announced it was forming “a new Financial Planners’ Association”.
The primary motivator behind the NTAA’s push into the financial planning space is its desire to champion the ability for tax agents and accountants to give advice.
According to the NTAA, the new association is being formed because “the encroachment of the financial planning industry has meant that often the quality of the financial planning advice they receive is tainted by the planner’s attachment to a large financial institution”.
“Tax agents and accountants are so limited in the advice that they can legally provide to their clients that they can’t even tell them where to bank or if they should take out life or income protection insurance,” according to the NTAA’s Roger Cotton.
He said that the latest in a line of limitations on tax agents and accountants was the Federal Government’s proposal to stop them being able to advise their clients in relation to setting up self-managed superannuation funds (SMSFs).
Irrespective of the merits of the NTAA’s arguments, its actions should have set off alarm bells within both the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) that they are now fighting on two distinct fronts.
One front they are confronted by is the continuing campaign mounted by the industry superannuation funds. On this new front they are confronted by an accountancy body which wants to see its members allowed back into the advice industry.
As any military officer will tell you, it is unwise to fight wars on two fronts and it does not matter that the financial planning industry did not start the fight.
Beyond the rhetoric espoused by both the industry funds and the accountants, financial planners need to come to terms with being subject to a competitive pincer movement.
One side of the pincer is reflected in the industry funds’ embrace of intra-fund and low cost advice, the other side of the pincer is reflected in the sort of agenda being pursued by groups such as the NTAA.
Another factor to be taken into account is the proportion of accountant/planners already operating in the industry — something reflected in the make up of many of the publicly-listed dealer groups, but in particular, Count Financial.
Those who monitor announcements made on the Australian Securities Exchange by many of the major publicly listed dealer groups will have noted the degree to which they have achieved growth via taking equity in accountancy practices around the country.
Indeed, Count’s looming float of its subsidiary, Countplus, is built on just such an offering.
If the NTAA has one thing in common with the industry superannuation funds, it is its preparedness to claim that the big banks unduly dominate the financial planning industry and that those banks have, in turn, been unduly influential in the design of Government policy.
According to Cotton, the NTAA’s new association “has been set up in response to concerns that large financial institutions that dominate the financial planning sector have actively lobbied successive governments to move to limit the advice that accountants and tax agents have traditionally provided to their clients”.
“The NTAA is concerned that proposed reforms to limit advice that tax agents and accountants can provide have been made at the suggestion of large financial institutions which basically want to stop taxpayers setting up their own funds so the contributions can be diverted into their own coffers.”
While the FPA remains the largest organisation focused on the representation of financial planners, its drive to become a professional association rather than an industry organisation has served to alienate a portion of its membership, some of who have migrated to the AFA.
In circumstances where the NTAA Financial Planners Association says it will have rigorous entry standards, vigilant ongoing education standards and an ethical code of conduct based on the Government’s own Tax Agent Services regime, accountants qualified as planners will have yet another option.
The problem, of course, is that the emergence of another body in the planning space has come at the same time as people such as the Financial Services Council’s John Brogden and the FPA’s Mark Rantall have acknowledged that a minority Government in Canberra will demand the industry speak with one voice.
AUTHOR
Mike Taylor
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