Accountants looking to become licensed to provide advice, especially to SMSF clients, must be conscious any option they decide to take will have a significant effect on referral partner arrangements they might currently have in place with financial planners, according to a licensing specialist.
“A big issue that has become apparent to me in the licensing decision is referral arrangements. I don’t think accountants have fully thought through the impact of them becoming licensed on existing arrangements,” Licensing for Accountants chief executive Kath Bowler told selfmanagedsuper.
“If you have a good relationship with a referral partner, you can work with it, but understand it will change. If you get licensed, your relationship will change.”
The reasoning behind the inability to recognise the impact licensing would have on existing business relationships stemmed from accountants’ inherent lack of understanding of what the licensing and advice process was about, Bowler said.
“A lot of accountants say these relationships won’t change because they think all their referral partners do is sell product. They don’t understand if they [the accountants] take over and provide strategy it is actually what their referral partner does,” she said.
She said a better understanding of the referral partner’s role might actually save the accountant from having to become licensed if the current relationship was really strong.
“In these situations accountants may need to look at formalising the revenue arrangements and relationship in other ways rather than becoming licensed,” she said.
In a strange twist, Bowler related how some financial planners were willing to allow their referral partners who were accountants to go through the licensing process with a view towards longer-term gain.
“Good planners have worked it out and are letting their accountant partners go through the licensing journey with the view that even if the partner doesn’t stay licensed, it will have been a worthwhile experience because the accountant will then understand the advice process,” she said.
“So even if the accountant is only licensed for a short period of time, they’ll have gained totally new respect for financial planners and the planning process.”
