Joining with accountants has rewards

Advisers must ready themselves for a wide range of issues before choosing to join with an accountancy firm, however the venture can boost both the number and quality of referrals, says Adrian Peck of Associated Planners.

Among these are ensuring any partners are large enough to work with and if both business are prepared for the extra workload. Peck says both parties must understand what the joint venture will do and planners should prepare an exit strategy to protect their reputation if things start to go wrong.

Speaking at the recent Association of Financial Adviser’s conference last week, Peck’s tip are based on his experience in forming a joint venture with an accountancy practice after it looked like they were going to form their own financial planning division.

“There was a real risk of the loss of referrals, so I talked about the pros and cons of my firm providing a financial planning service,” he says.

Peck had already established two financial planning firms with a separate back office operation to handle the administration.

“With a joint venture I saw the potential to grow further. We also get into the area of their referrals which came from the legal profession and other accountants,” he says.

“It was the opportunity to create high-quality referrals.”

Peck says the accountants received a high-quality solution, providing financial planning for their client base.

“It was an easy way for them to achieve this, but they did want some form of control.”

The result was a 50-50 partnership in the joint venture with Peck and a nominated partner from the accounting firm as director.

The back office support came from Peck’s administration company, but not everything ran soothly from day one, he admits.

“Accounts charge a fee for service but it is on an hourly basis, which is a hard way for us to charge,” he says.

However, combining financial planning and traditional accountancy advice was a success and the joint venture grew quickly, Peck says.

“There was an increase in the number and quality of the referrals,” he says. “We were used to seeing clients with an average of $300,000 of funds, but $1 million is now the average.”

Peck says accountants’ referrals tend to come from business, rather than the mums and dads that a planner more traditionally attracts.

“The accountants worked with me and that was a great help,” he says.

The disadvantages of the joint venture, from the planner’s point of view, was the extra workload, Peck says.

“There was also the task of finding and training a new team of staff. Our new business partner, the accountants, had different thoughts and processes for running a business,” he says.

“There was also the issue of travel as accountants go and visit their clients, so I spent more time travelling.”

Peck has agreed to be bought out of the joint venture by the accountants. He is already starting another venture, aimed at corporate superannuation, with a different firm of accountants.