So let’s tackle this statement head on and try to reframe the meaning behind it.
When an accountant says “I want to do what I’ve always done”, my understanding of “what you’ve always done” is to help your clients with advice and services they can count on (and you can reliably provide).
I have no doubt that if accounting practices don’t adapt and change, they will become irrelevant. What most accounting practices don’t seem to realise is that they have been constantly adapting and changing, albeit at a slower rate than what is needed right now.
Let’s take a journey back in time and see how accountants have changed and adapted to ensure they are delivering the services their clients want and need. The 1980s and ‘90s saw sweeping changes to our superannuation system with the introduction of compulsory superannuation, taxation of super contributions and reducing the tax on superannuation benefits. Accountants played a major role in educating their clients about these rules, and devising strategies to minimise taxation and maximise savings at retirement.
Another time of significant change for accountants arrived in 2000 with the introduction of the GST. Not only did accountants have to undertake additional training to understand the new rules, they had to introduce a whole new range of services and support to ensure their clients complied and lodged their business activity statements on time.
In the past 20 years, the increasing frustration with institutional superannuation funds has seen the
self-managed super fund (SMSF) sector grow to become the largest sector of the superannuation industry.
Accountants have played a major role in facilitating this change, helping clients who were frustrated with the institutional superannuation system to establish their own SMSFs and take control of their retirement savings.
Looking forward now, accountants are not only staring down the barrel at Australian Financial Services
licensing, but are also grappling with outsourcing and cloud-based accounting. While there is no denying the disruption and rate of change this is causing accountants, these latest changes recognise there are more efficient ways of meeting compliance requirements, which in theory, should be freeing up time for accountants so they can move away from compliance and into the advice space, where their skills and expertise can be best utilised.
Focusing specifically on licensing, let’s look at three common areas of advice accountants provide and consider how licensing will allow them to support their clients far more e ectively than if they remained unlicensed.
As you can see from the examples in the table, the real value and expertise comes from providing your clients with recommendations, not just options. If you’re reading this and thinking, “I already do all that”, then you probably need to be licensed now. The challenge for you will be to document what you do now in a compliant manner (statement of advice), and ensure that other licensing obligations, such as best interest duty and considering alternative options, are fully addressed.
If you are only presenting options to your client and looking at ways to save tax, you won’t need to be licensed, but I’m not sure that you are helping your clients as much as you could be.
Licensing means I’m going to have to sell product
Before we finish, let’s address another myth that deters many accountants from licensing, and that is the mistaken belief that you will need to sell product. This simply isn’t true.
Historically this was certainly the case, and with many of the current licensing options available to accountants, there is not so much an expectation that you will sell product, but rather that you will refer to someone else in the network who will.
Many in the financial services industry are struggling to understand why an accountant would want to be
licensed for strategic advice and not product advice, as this not only results in missed revenue opportunities but also prohibits you from ‘ring-fencing’ your clients from potential competitors who are offering a full service.
I, for one, completely understand this resistance, because the moment you move into product recommendations, you run the risk of eroding one of your most valuable commodities – the trust of your clients.
Let me explain this a little further. I recently attended a conference where Andrew Inwood, CEO of Core Data, was presenting on this very topic. Mr Inwood identified a range of factors that make up ‘trust’, and one of the key elements was ‘certainty’. For accountants only providing compliance advice, this involves reporting on events from the past, so the information and advice can be provided with a high degree of certainty.
Financial planning on the other hand and more specifically, investment advice, is based on the premise of making recommendations about the future – recommendations that can never be provided with 100 per cent certainty. There are certainly a range of sound investment approaches which, if adopted, can minimise the uncertainty, but they can never remove it.
So if helping your clients is what you have always done, then the reality is you will need to change what that help looks like to remain relevant to your clients. And with the current changes occurring in relation to technology, outsourcing and of course, licensing, there has never been a better time to move into the advice space and truly capitalise on your skills and expertise.
Kath Bowler is CEO of Licensing for Accountants, an independent firm which supports and transitions accountants into licensing
