A breakdown in communication between financial planners and accountants has long been an issue hindering efficiencies in the referral partnerships between the two groups, according to a co-founder of GPS Wealth.
Greg Holman, who has been an accountant for more than 20 years and leads the accountancy operations of GPS Wealth, says that in most cases, difficulties stem from a lack of communication between the financial planner and accountant.
“Most financial advisers in the past have had trouble working with accountants because of a lack of communication from the adviser back to the accountant as to what the adviser has done for the client.
“My view is that 40 per cent of accounting firms don’t get the referral process, they don’t actively encourage their clients to seek advice if they ask for it. 10 per cent do it well, and the other 50 per cent just need a system and process [in place] to do it,” Holman says.
GPS Wealth started out as an accounting practice with only a handful of clients, growing to one of Australia’s top 30 accounting firms before branching out into financial advice just over two years ago.
Fees over commissions
Asked whether the timing of the company’s move into financial planning was problematic, having officially launched in February 2012, in the midst of the Future of Financial Advice (FoFA) reforms, he says no.
“We had no legacy issues, having started from a clean slate, and with a model that’s been built on fee-for-service, not asset fees or product fees,” Holman says.
“We’re still commission-based for insurance…but completely fee-for-service for other financial planning, and all our meetings are obligation free.”
Threat potential
Some groups in the accounting and financial planning industries have raised concerns about the potential risks of encroachment and poaching of clients from both sides. However, Holman doesn’t believe this will be an issue at all.
“Some financial planners say that, with the removal of the accountants’ exemption [on 1 July 2016], this is going to see accountants try to take their work, but I believe nothing could be further from the truth.”
Instead, he expects that those practices that have efficient referral processes in place will reap significant benefits.
He also does not expect to see significant numbers of accountants moving fully into providing financial planning services. “Accountancy is a fulltime job…it’s very hard to do both well. We believe they are specialist fields…I’m yet to see any accountants who can do both well,” Holman says.
“I acknowledge they will need to work with each other, and the advisers need to have the tools, systems and processes to do that.”
On the financial planning side, GPS Wealth now employs 65 financial planners across some 35 practices. Holman says that around 25 advisers joined in the first 12 months, with the remaining 40 joining in the last year, and the business plans to keep growing this number.
