In July 2016, accountants will need to be either fully licensed to provide financial planning advice or hold a limited AFS license. M&A Consultant and Radar Results Principal, John Birt, has worked with financial planners and accountants for more than 30 years, and believes issuing limited AFS licenses to accountants is dangerous.
Birt asks, “Would you be happy to have a part-time surgeon give you a triple heart bypass?” In the past, successful accountants who have provided quality financial advice have committed fully to the financial planning standards and process.
“You just can’t do it part-time,” Birt adds.
A major concern is the professional indemnity insurance coverage Licensing that may or may not fully cover the advice offered to a client, particularly when it’s limited advice.
Birt says, “Do the accountants really understand where the boundaries are with the limited advice they can offer?” It’s all well and good for ASIC to document the boundaries, but where are the patrol police to do the monitoring?”
Recently, Birt was told by HNW Planning, a mid-sized independent AFSL, that they would accept just 10 transitioning accountants at any one time. They will not be using the limited licensing provisions at all. Rather, HNW will only use the full license, and then restrict authorities appropriately.
“When licensing of accountants was first announced, HNW Planning hoped to attract many accountants to its AFSL. They have since looked at the risk/returns, and have decided against that approach. Instead, they’re concentrating on providing a high service to a few accountants prepared to fully engage in the process,” said Birt.
Birt provides a real-life example where a 10 partner accounting practice decided to have two partners put down their tools and move fully into financial planning. The two partners took that particular accounting practice to number one in Australia for financial planning in relation to the large dealership of 200 practices in a relatively short period of time.
“I can see what the government wanted to try and achieve by offering this band aid solution, but I cannot see it working effectively. You’re either fully in or fully out. That’s how mistakes are made when you do something half-hearted,” Birt said.
