There is nothing particularly novel in the provision of financial planning advice by IFAs to clients of accountants or, for that matter, solicitors. For many years accountants, be they large national or smaller high street firms, have retained the services of in-house financial planners.
The idea being that fees charged to clients would be retained by the firm. However, in practice, many partners would have their own trusted financial advisers to whom clients were referred, quite probably to the annoyance of the in-house consultant.
It has always been the case that the building of relationships is based on trust to ensure that clients receive the best possible advice on all fronts.
This is taken as read. Nothing new there, but what we have seen increasingly is that accountants, for a number of reasons, are seeking to outsource financial planning entirely.
For instance, the weightier burden of regulatory requirements, the increase in professional indemnity costs and the realisation that accountants themselves should stick to their knitting. The big ticket areas which generate higher fees – audits, forensic accounting, company registration, payroll and auto-enrolment services, selling a business and so on and also making sure that Consumer Duty protocols are met also means that firms are looking to outsource clients’ financial planning needs.
In some cases, the in-house financial adviser is nearing retirement and a new approach makes sense; but what really helps the senior or managing partner of an accountancy firm is in-depth knowledge of how wealth managers and other IFA firms work. And, of course, the building of trust between two professional businesses.
At MKC Wealth, the growing number of accountants who have entrusted their clients to us do so only after thorough due diligence.
A referral that results in poor service levels is very damaging on the reputational front, particularly when the aim is to build a longstanding partnership of mutual referrals.
Indeed the business-owner client of the financial planner will need the advice of top-level accountants who have the same professional approach and standards.
Now that Consumer Duty is in force and achieving the best possible client outcome is under greater regulatory scrutiny it is even more important that both parties work more closely than ever.
Take the example of the business-owner client of the accountant. They have an established relationship. The financial planner, meeting the client for the first time will add value by bringing a fresh and objective opinion to the table.
All too often accounting and financial advisory services are treated as separate disciplines, with the result that conflicting advice is sometimes given, albeit inadvertently.
MKC Wealth’s business model is designed to promote full integration – we are responsible for management, compliance, back office systems and marketing, while the practice integrates the service in a way that generates maximum business efficiency.
Clients increasingly expect integrated advice which takes into account all aspects of their financial affairs, particularly where a considerable amount of wealth is tied up in a family-owned business. They don’t want to spend time going from one adviser or accountant to another. They want an “holistic” approach.
In conclusion, ensuring that this wealth remains within the family is a primary concern. The best possible advice is needed on established products and services from personal and corporate protection to tax planning, pensions and retirement planning, wills and trusts, tax-efficient savings and investments, and mortgages, as well as advice on a business exit strategy and estate planning.
Mark Dallas is director at MKC Wealth