The world of finance is complicated for the ordinary person in the street, who may have a general understanding of banking, budgeting and the process of applying for loans to buy a house or consumer goods, but have no clue at all about shares, bonds, derivatives, futures or other exotic sounding terminology. Throw superannuation funds into the mix, and the average working person will confess that they know they should be paying more attention to this crucial investment. They will also admit they don’t know how and are just hoping their fund manager is looking after their interests. Start talking about financial planning and their eyes glaze over.
This same ordinary person, however, isn’t a fool and has a fair idea of the type of services that an accountant can provide since many of them use an accountant to prepare and lodge their tax returns. Where people become confused is in trying to compare the services provided by an accountant with those of a financial planner. Both professions are involved in the world of business and finance, and may have similar skills, but apply them in different ways.
An accountant can be a financial planner, but only after completing an accredited course in financial planning, in addition to their already existing accounting qualification. Conversely, an accredited financial planner who has not qualified as an accountant is a financial planner only. The role of a financial planner is to help their clients identify their lifestyle and financial goals, and assist them to put strategies in place to achieve those goals.
Part of their role is to work with mortgage brokers, lawyers, stockbrokers and accounting firms to maximise their clients’ financial returns on investments and to provide them with information about suitable investment vehicles that would suit their long-term goals and aspirations. Many accounting firms provide access to financial planning for their clients by either having a financial planning subsidiary attached to their practice, or by providing their clients with contact details of financial planners they have dealt with and who they trust.
It is not the role of the accountant to offer financial planning advice to the client themselves, unless as mentioned earlier, they also are licensed financial planners. Since most people who have the capacity to begin an investment portfolio already have a relationship with an accountant who has been looking after their tax affairs, it seems only logical that they should approach their accountant when looking around for an honest and reliable financial planner.
With both their accountant and their financial planner working in conjunction with each other to look after their interests, the ordinary person struggling with the detail of managing complex investments should feel comfortable that they are in good hands.
