I have observed that both the professional services sectors of the accounting and financial planning industries are facing similar challenges with operational and ownership models being challenged in the modern era to firstly attract new entrants and secondly to entice them into becoming self-employed business owner entrepreneurs.
- Paul Tynan
- October 3, 2016
- www.connectfsb.com.au
Connect Financial Service Brokers (Connect) CEO Paul Tynan has observed that both the professional services sectors of the accounting and financial planning industries are facing similar challenges with operational and ownership models being challenged in the modern era to firstly attract new entrants and secondly to entice them into becoming self- employed business owner entrepreneurs.
Commenting on the partnership model for accounting Paul Tynan said that it continues to buckle under the stress as Millenniums together with Gen X and Y are already besieged servicing the burden of current debt – they have the cost of their university education, home loan repayments, lifestyle related expenses and their own children to fund. As a result have no capacity left to entertain business ownership.
“In this environment, new industry entrants are only seeking a stress free employment situation as they focus on servicing / reducing their mounting debt and simply don’t want to take on any further financial commitments such as becoming a business owner”, said Paul Tynan.
“This issue, together with a lack of partner alignment to sustainable growth, incoherent decision making processes and different partner succession planning time horizons has seen some firms move away from the equity partnership model to a corporate business framework”.
A further observation of the current accounting marketplace is the struggle to attract the ‘right graduates’ and in response, firms have begun seeking recruits with entrepreneurial attributes rather than the technically qualified students the higher education institutions are producing.
Paul Tynan continued’ “Recently a number of metro, suburban, rural and regionally based accounting firms have entered into joint ventures, licencing arrangements and mergers with financial planning firms and this is a positive affirmation of the new practices of the future as the financial services sector moves to a fully professional advice focussed service offering.
“Unfortunately, many of these alliances are being undertaken in haste with poor due diligence and non-aligned / incompatible cultures and lack of appreciation and understanding of the partner business structure. As an outcome, we can expect to see some messy divorces in the future as these arrangements disintegrate”.
The present structure of the financial planning industry is quite literally deterring potential planners from entering as those would be self-employed practitioners and business owners struggle to find that small book of clients needed to start a commercial enterprise and advice focussed career.
The scarcity of small books of clients in the marketplace is frustrating the prospective planners and in doing so, further deterring the next generation said Paul Tynan.
“Unfortunately this is yet another consequence of the industry’s concentration with the majority of licence ownership in the hands of six corporate entities. A further outcome of concentration is the industry’s buyer of last resort (BOLR) arrangements that has further incensed many and contributed to the lack of books on the open market.
“The organisations and licensees who have a BOLR structure would say that this is the way they attract new planners into their business model. In contrast I receive enquiries on an almost daily basis from financial planners who regard BOLR books as just telephone numbers and have been purchased at overinflated industry prices”.
As if the financial planning sector didn’t have enough challenges and issues to contend with – the ongoing debate over academic qualifications, professional development standards and product structural issues are also acting as a disincentive to prospective entrants added Paul Tynan.
The professional member associations representing the accounting and financial planning sectors have been at the forefront dealing with a multitude of challenges relating to the pace of change, new regulatory requirements and ageing membership bases.
“Regrettably these industry bodies have found themselves needing to focus on lobbying government whilst simultaneously trying to remain relevant to the changing needs of their members with education standards, conferences, roadshows and workshops”, said Paul Tynan.
“To remain relevant in the future, professional associations will need to be far more proactive with significant investment of resources needed attract new industry entrants with business owner mindsets and supporting their mature age members to successfully exit the workforce into a financially secure retirement”.
Paul Tynan concluded “No industry or sector is immune to disruption and change. However, there is an unprecedented opportunity for every accountant and planner to consider what needs to be done to ensure their business model is newer, leaner, technically enabled and an efficient client focussed enterprise.
“The lines between the two sectors are going to be blurred even more and those accountants and planners that view the future as an opportunity to provide comprehensive holistic advice and services, rather than a threat that will be the most successful”.
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