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Pros of Establishing a Financial Planning Division

The removal of the accountants’ exemption on the 1st July 2016 in relation to SMSF advice provided a strategic wake-up call to many practices. It made them firstly think about whether they would like to continue providing SMSF advice. Secondly, if they do, in what format (AFS licence or authorised representative)? And thirdly, whether they should take the next step and expand their services into financial planning? And if not, whether they should establish a referral arrangement with a financial planning group.

Expanding into financial planning can be compelling for practices because:

  • They already have the client base. Most of the practices accounting and tax clients would benefit from financial planning services.
  • They are their clients ‘most trusted advisor’. In client surveys accountants are typically rated as much more trustworthy than their financial planning cousins. Trust is the key ingredient in winning financial planning clients.
  • Accountants are already highly educated so adding a financial planning qualification is relatively quick and easy. Some part-time online courses are only 12 weeks long. Some fulltime course are only three days!
  • Diversifies the practice’s revenue streams whilst generating extra revenue. This helps replace some of the declining compliance fees revenue.
  • Increases the number of different services provided to a client. Clients receiving three or more services from a practice are more ‘sticky’ and have higher retention rates. It all just becomes too difficult and complicated for the client to change accountants – even when dissatisfied.
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