Accounting is one of those professions that, to the lay person seems fairly straight forward. Accountants keep the books straight, prepare tax returns, look for cost savings everywhere, caution against reckless spending and generally keep a tight rein on anything to do with finance. This is the perception many people have of the role, but it has morphed way beyond this simplistic version. As the world of business and finance has become larger and much more complex, accounting has adapted to service this world, and now has areas of specialisation similar to the medical profession, where it is possible for a person to focus much of their career in one area.
Financial planning is a good example of this type of specialisation. In Australia, to become an accountant requires years of study at tertiary level, and to become a CPA (Certified Practicing Accountant), a further block of study and mentoring as required by the relevant professional association. However, for an accountant to legally call themselves a financial planner there is further study and registration with the appropriate authorities before an accountant can add “Financial Planner” to the shingle on the door.
This needs to be clearly understood when choosing an accountant to also provide financial planning advice as well as other standard accounting services. Financial planning is one of those specialised areas mentioned earlier where a different body of knowledge is required. A financial planner can legally and competently provide advice and construct financial plans, but is not qualified as an accountant. To find an accountant who is legally qualified in both areas is a bonus.
There is a need for both a business and an individual to have a solid financial plan in place, and it is only with the rise of superannuation that individuals have understood this, and sought out financial planners to help them get and achieve retirement goals. For a business, sound financial plans are the mechanism that moves the strategic goals along. It’s fine to set strategy, looking five years or more into the future, but without the back up of written plans to attract capital, divert profits into investment vehicles, pay down debt, secure business loans or any of the other tactics needed to underpin business growth, most strategic efforts evaporate with the first economic crisis.
A business accountant who is also a financial planner can approach the construction of financial plans using both disciplines. This provides a wider range of options as there is a better understanding of the real position of the business. The planner could review the financial statements of the business from the perspective of an accountant, and then swap roles to discuss tactics with the business owner and devise a plan that suits the circumstances.
When selecting an accountant to perform this important role, word-of-mouth referrals from business colleagues is as good a place as any to start. Treat this like a recruitment process by short-listing two or three possibilities, make appointments with each, go armed with a set of questions to be answered, and may the best accountant win!
