Wealth management: A natural for accountants
Gordon Gilchrist argues that accountants are wrong to shy away from providing financial advice when clients are crying out for it.
Since 2008 the world of financial services has been pulled through the mire; it’s been one horror story of mis-selling after another. It’s understandable that accountants look to that profession and decide that they don’t want to have anything to do with it.
But what if they had picked up the gauntlet 20 years ago? The excesses we have witnessed probably would never have happened. Accountants aren’t tarnished by the taint of commission. They get paid by hour and don’t differentiate between the value of tax planning advice that saves £10,000 or £1m - clients still get the same bill.
The word of financial services is different - they get a percentage of the value increase. It’s a different mindset.
The holistic view
The link with tax planning and exit route planning is so strong that one could argue that financial services should be a natural domain of the accounting profession. The accountant is blessed with a very holistic view: they have all the relevant information from company accounts, tax returns and client interviews. Their input into overall wealth management and asset protection is so much more important than any other professional adviser. An IFA has to ask for all the documentation that the accountant already has - which is why the accountant should have been providing that advice in the first place.
Tax advisers are already engaged in short term financial to protect clients from higher tax rates - they’re the only player in town who can do that.
But there’s a longer term role that’s covered by phrases such as wealth management or asset protection - helping to protect clients against future liabilities or financial pitfalls.
Accountants can do these things. The problem is clients don’t know it. Accountants haven’t done it because they don’t want to be seen to oversell. I prefer to think of it as giving customers something they want. If you can do that, they will pay much more than for supplying something demanded from them by regulations.
More than one way to do it
It’s true that financial services are heavily regulated, and many firms prefer to stick to compliance work such as accounts, audit and tax return, where there’s less scope for using professional judgement.
The account serving a small client base from Inverurie might struggle to afford a specialist tax partner, let alone a financial adviser. If you can’t afford the cost of setting up your own IFA operation, the answer is a joint venture. This was the rationale for 2020 Group’s relationship with Positive Solutions. Positive is a 1,700-strong network of advisers, with a specialist professional partnership group trained to work with accountants. For many of the firms who have got involved, it’s the best thing they ever did; they found their vocations.
If the accountant doesn’t provide these services then someone else will and they risk losing the client. We all know that the more services you buy from an accountant, the less likely you’ll leave.
With the right people on board, firms earning perhaps £1m in fees have grown their revenues 30-40%. With these results, one can reasonably assume that it is a service customers are willing to entertain.
Jonathan Morley, business development director of Positive Solutions feels the same way. He recently commented: “From the IFAs point of view, the accountants have provided the trust and integrity which the Financial Services arena has struggled with over the past decade or two. As a result, the increase in revenue through joint venturing with accountants has been outstanding and long may this continue.”
Gordon Gilchrist is marketing director of The 2020 Group. A regular lecturer, he is also the co-author of the Croner.CCH book, 'SME Consulting'.