Why Some Accountants Don’t Give Financial Advice

Neville and Nancy have just changed accountants and they’re not happy. They don’t know if the last accountant was asleep at the wheel or if the new one is telling fibs.

Neville owns a bricklaying business called ‘Bricks’n’Bits’. With shoulders like a medium sized house and a big white smile to match, Neville could easily be the poster boy for Victoria Bitter. But right now he’s in no mood for beer and skittles. He wants answers.

Nancy works for a law firm called ‘Love a Lawsuit’. She says she’s just a secretary but she has a mind like a steel trap. Neville and their three grown sons idolise her.

Before we sit down Neville asks that I call him Nev.

“So Nev, why do you think your new accountant is not telling you the truth?” I ask.

“Well, as you know, these new blokes, ‘Numbers Never Lie’, bought Bob’s practice late last year. And in our first meeting, the new accountant George, started showing us how we could possibly save some tax and do a few other things to help plan for our retirement”.

“You don’t want that?” I ask.

“Of course I do, who doesn’t. But I want to know if George is leading us up the garden path so we don’t go anywhere else or was Bob not doing his job properly?”

“What’s your opinion Nev?” I ask.

For the first time in the meeting Nev stalls. He’s now wondering if he really wants to hear the truth. So he looks at Nancy like she already knows the answer.

It’s time to lance the boil and bring everything to a head.

“Tell me Nev, why did you like Bob?” I ask.

“Oh mate, he’s as honest as the day is long. We’ve been best mates since high school. I respect him so much because he went to Uni and I didn’t. I think he’s a genius.” Nev says.

“Ok. So because you trusted him and he went to Uni you never questioned him. Correct?”

“Ah, yes”. Nev said rather sheepishly.

“Nothing wrong with that Nev. But now you’re wondering if Bob cost you a small fortune in tax savings as well as a few other things to do with your retirement. Correct?” I ask.

Nev remained silent, almost forgetting to breathe. So I explained why some accountants don’t give financial advice (including tax).

• Accountants account for the ‘past’, Financial Planners plan for the ‘future’
• Some accountants are not licensed to give advice and are therefore not covered with the necessary levels of professional indemnity insurance.
• Most advice is investment based which requires a planner more than an accountant
• Like planners, not all accountants have the same skill set. Some specialise, you can’t be all things to all people.

“So which one is more important?” Nev asked.

“You need both. You need to know the background to understand the foreground. But you should always start with your accountant”. That seemed to resonate with him.

“So how do I find the right accountant and planner”.

“Well, the good news is your new accountant also doubles as a licensed planner. But if you’re still unsure if he is the right fit, try these questions. They apply to both accountants and planners”.

7 Questions to Help Find The Right Accountant and Financial Planner

1. How long have you been practising?

Listen for: The more experience the better. A minimum of 5 years is ideal if they don’t have someone more senior working with them.

2. What type of clients do you take on? What services do you offer or prefer?

Listen for: It’s helpful if the adviser deals with people in a similar situation to you, for example young families, retirees or small businesses, as they will have experience in the type of advice you are looking for. E.g. At Suncow Wealth, we mostly do investment based work more than insurances.

3. What qualifications do you have?

Listen for: Qualifications in finance, economics, accounting or financial planning. A diploma or degree qualification in one of those disciplines is desirable. As a general guide, the longer a course of study the more comprehensive the course content.

4. What are your most successful clients doing?

Listen for: Specialisation with a niche services or approach. This will give a good insight into what type of advice clients receive and if the adviser/accountant is a good fit for you. It can be a great way of learning new ideas. It’s also a good way of finding any contradictions in the advisers/accountants approach.

5. What are your fees and how are you paid?

Listen for: Designing a financial plan is just like building a house. No two are ever the same. Advisers may charge according to hours worked, assets under management or outcomes achieved. Fees can be a one-off or may include an on-going management fee pending client requirements. At Suncow we prefer a personalised fee for service approach based on desired outcomes to be achieved, which may be multiple.

6. What is your investment approach? (when speaking to a planner)

Listen for: This is very important. It will depend on whether assets are housed inside or outside super due to the tax treatment on different asset classes. At Suncow we prefer direct investments (shares and property). We don’t like traditional managed funds because they are often too expensive and not very tax effective.

7. Can I have it in writing?

Listen for: Yes! A good adviser will always put a proposal in writing. He/she will outline the approach in line with your risk profile as well as costs before proceeding. A good adviser will not ask you to proceed straight away. Let it sit for a few days.

Other Questions to Consider.

8. Do you receive rebates or bonuses from product providers?

Listen for: A good adviser will not takes bonuses or rebates, especially for investment products. If they do, ask if they pass them onto the client.

9. How do you keep track of changes in a clients circumstances?

Listen for: Many advisers these days offer client portals so clients can update their personal financials.

10. What sort of access will I be given to the data you hold about our personal situation or business?

Listen for: Client portals (see above) also allows clients to access application forms, etc as well as store important financials for extra security via the cloud.

11. Will you return my calls within a reasonable amount of time?

Listen for: You shouldn’t even have to ask however some practices offer Service Level Agreements (SLA’a). At Suncow we have a Sundown Rule which clearly states all calls and emails will be returned by sundown that day. It’s even on our voice mail.

12. Are you familiar with the accounting software package I use?

Listen for: This is a good questions because there are a lot of software packages on the market so don’t make assumptions. E.g. not all accountants use Xero

13. Do you have a newsletter or some form of communication piece?

Listen for: The best forms of communication will be education based rather than news pieces that masquerade as sales letters trying to flog something. The communication pieces will tell you a lot about how they do business and their advice model, so ask for a copy

14. Can I speak to an existing client?

Listen for: If after two meetings you are still in doubt keep looking for another adviser/planner. You shouldn’t have to ask to speak to a client.

15. Will you be the only person working with me?

Listen for: Sometimes advisers work in teams while others prefer to work on their own with an assistant. There’s no right or wrong, just what’s comfortable.

16. What information will you need from me to provide me with financial advice?

Listen for: Lots of questions about your needs, wants and concerns, especially your goals. You don’t want them to bamboozle you with lots of product information and not ask about you. Questions come first, solutions come second.

I explained to Nev that not all these questions are relevant but they will give him a good reference point. But I could tell something was still bothering him…

“So do you think Bob cost me a lot of money?” Nev asked.

“No I don’t. Right up until your early fifties you had a lot of non-deductible debt such as a mortgage and other personal loans which you had to get rid of first. Like most people with a growing family, it appears you had little surplus income until the kids finished school/uni and the house was paid off. Plus, I reckon if Bob was the good little Anzac you said he was, he would have told you so”.

Nev had that poster boy smile back again and his best mate was still his best mate!

Have a great weekend!

Adam

P.s. this story is based on a real life situation, only the names have been changed.