In the last issue of Public Accountant, we covered the rationale for diversifying your business into providing financial advice. We’ll now look more closely at one avenue to achieve this: becoming a qualified financial adviser yourself.
First things first
As with any business decision, it is important to have a clear vision for the business outcomes you want to achieve by going into financial advice. This will help you to determine the appropriate options and to define the relevant criteria needed to assess them.
Becoming a qualified adviser has a number of pros and cons, the significance of which will vary for each accountant and practice. You’ll want to assess how this approach compares with employing an adviser within your business, for example.
Some accountants tell us they’ve had bad experiences when referring their clients to a financial adviser who provided advice that was not in their clients’ best interests. Becoming authorised yourself means you can be certain of the advice your clients are receiving and the quality of that advice. You will, of course, be well versed in the clients’ differing needs and circumstances and therefore well placed to give them appropriate advice. There are a few key issues to consider with this approach.
Your time and focus
Firstly, despite the fact that you probably have a number of qualifications and relevant ongoing CPE, most accountants will probably have to complete some further study. The requirements for financial advisers are set out by the Australian Securities and Investments Commission (ASIC) in regulatory guide RG146. This guide is now part of the lexicon of the advice industry.
There are a number of education service providers who can offer you a course tailored to meet the requirements. Commonly, it is in the form of a Diploma of Financial Planning (DFP), comprising four units broadly covering the financial advice industry and rules, investments, insurance and superannuation. You can typically complete the course off campus at your own pace.
The cost and quality vary between providers, but, depending on the course structure, you can expect to pay around $500 per subject. If you completed the course a few years ago, you may now have to cover new requirements that have been introduced. ASIC has a registry where you can check whether the course you are considering is going to give you the recognition you seek. Licensee groups such as MLC can also provide some guidance.
The advice model you choose may also influence the education you will require. Australian Financial Services (AFS) licensees may have other education requirements for financial advisers licensed through them, depending on the advice you want to provide. This may include specialist short courses and potentially completing the Advanced Diploma of Financial Planning (ADFP). Alternatively, if you seek a limited authorisation to be able to provide self-managed super fund (SMSF) advice and related advice, you may only need to complete two of the four DFP subjects.
If you’ve found the time to complete the study then there’s the ongoing issue of how you will divide your time between financial advice and your other accounting/tax-related work. You’ll probably have to dedicate a substantial portion of your time to financial advice if you are to justify the time, cost and effort. Are you prepared to add to the amount of time you spend remaining up to speed with changes in the tax landscape with further financial advice-related education?
