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Cons with Establishing a Financial Planning Division

The problems practices encounter once they have established their own financial planning practice include:

  • The accountant’s personality. Most accountants are not sales people and do not actually want to sell (which a lot of financial planning actually is).
  • Lack of scale. A recent survey showed the average practice had financial planning revenues of only 4% of their accounting and tax revenue. Is it worth the time, effort and money?
  • Practice principals trying to provide both accounting/tax, plus financial planning to clients find this is rarely effective. What does work though is a practice having separate people in the practice providing the different services. So one principal will provide the tax, and another the financial planning.
  • Converting accounting practice clients into financial planning clients is harder than it first appears. This is because although 70% of tax clients use an accountant every year, only 25% of individuals use the services of a financial planner at some time in their life. This is a big difference.
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