Eighteen months ago Queensland-based accounting practice Initiative Group decided to leap whole-heartedly into financial planning, after five years of dabbling in it with disappointing results.
The medium-sized practice, which was established in 2003 and employs over 10 staff including five accountants, began offering financial advice in 2009 under an outsourced model, referring existing clients to an institutionally aligned adviser.
Part of the firm’s growth and retention strategy was to expand its value proposition and increase client engagement by providing advice to existing clients, of whom a growing number had a self-managed superannuation fund.
However, it wasn’t long before the group’s outsourced arrangement broke down, and over the next few years the group churned through two other institutionally aligned advisers before director James Mulhearn decided the referral model wasn’t working.
Mulhearn and the practice’s other director Kim Jay had a decision to make; get fully licensed, employ an in-house adviser and dive head-first into financial planning, or bow out completely.
The pair agreed the practice was mature enough to release Mulhearn to work full time in the advice business, which meant either applying for a full Australian financial services licence or finding a licensing partner. After an extensive review of the options, Mulhearn decided the self-licensed route wasn’t feasible. He met with several dealer groups before choosing to become a corporate authorised representative of GPS Wealth.
“The referral model is a great option, but success is heavily dependent on being able to find a quality adviser who is a good cultural fit, which isn’t easy – and after three failed relationships we couldn’t risk another bad experience for our clients,” Mulhearn said.
“The practice had grown to a size where it was viable for me to step back from my accounting role and dedicate my time to financial planning, which I had been doing on a part-time basis.”
Mulhearn knew he had to remove himself completely as his clients’ accountant because it was becoming increasingly difficult to continue providing accounting and tax services as well as financial advice.
The process of extracting himself from the accounting business and establishing an effective, compliant advice framework took around 18 months and a lot of support from his licensee.
“I’m finally at the point where my clients, many of whom I’ve had for over 16 years, see me as their financial adviser not their accountant,” he said.
Mulhearn said the government’s decision to remove the accountants’ exemption and introduce tougher licensing requirements from July 1, 2016, left many accountants with little choice other than to obtain a limited licence or limited authority and form an alliance with a fully licensed financial adviser whom they trusted implicitly.
It also presented an opportunity for accountants to fully embrace financial advice, play a more active role in their clients’ lives and ultimately build a diversified, multidisciplinary practice.
“As a mature, well-resourced accounting practice, we decided a full authority was the right way to go; however, a full licence or authority won’t be the right solution for most accountants,” Mulhearn said.
“The challenge now is for those accountants to gain a limited licensing solution and find an adviser who they can trust. In our experience, many advisers are still heavily focused on selling product and there’s a long way to go when it comes to separating product from advice, so we feel fortunate to have found a non-institutionally owned licensee who shares our passion and commitment for strategic client-focused advice.”
