Accountants ‘may hold key’ to addressing skills shortage in financial planning

In a new opinion piece published on ifa, Scientiam head Nigel Baker argued that the growing number of accountants in Australia (currently at 220,000) could serve as a boost to the advice sector.

“Accountants may hold the key to addressing the skills shortage in financial planning and making advice more accessible. They are highly respected and trusted by their clients and ideally positioned to offer personal advice and general information,” Mr Baker wrote.

He said that regulatory changes and rising costs turned many accountants away from advice. However, the impending Quality of Advice Review (QAR) in December could see them “pour back into the sector”.

“Accounting firms are valued at between 0.8 and 1.2 times earnings compared to roughly 2.7 times for financial planning businesses,” the op-ed reads.

“While that 2.7 number relates to holistic advisory businesses that provide superannuation, investment and retirement advice, accountants don’t necessarily need to go down the comprehensive advice route to gain the benefits.

“Demand for general information is also strong. Who better to educate people on basic financial principles than their trusty accountant?”

However, Mr Baker conceded that before advisers and accountants can work together again, regulatory reform must happen.

The QAR is expected to tackle a number of current issues, including regulation, compliance and how to make professional advice more affordable and accessible for Australians.

Scientiam’s own submission to Treasury argued that the term general advice “should be scrapped” and be labelled as general information, saying that the change would strengthen consumer protections, minimise confusion and encourage more exploration and investment in digital advice and information solutions.

A number of industry groups have also publicly issued their QAR submissions to Treasury in recent weeks, including the FPA, SIAA, ClearView and the Joint Associations Working Group (JAWG).

The QAR, to be conducted by Michelle Levy, will be provided to the government by 16 December this year.

“The current advice regime was built around large institutional product manufacturers and their aligned distribution networks. It was not designed for educated, qualified professionals,” Mr Baker continued.

“With the banks and institutions all but gone from personal advice, it’s time for regulation to keep pace to attract new talent from other professions.”

Read the full piece here.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.