Rethinking the Accountant / IFA relationship

Accountancy firms have, for some time, relied on in-house financial planners to provide advice and services to their clients. This practice is not unusual, with both boutique and established firms embracing it – not least because of the seamless nature of several financial services operating under the same roof and sharing the same clients. But this practice is changing, with accountants and their firms increasingly looking to outsource financial planning services entirely. Why? Rising indemnity costs, a changing regulatory landscape and even client expectations and needs are driving this change. This, in turn, is encouraging accountancy firms to partner with trusted Independent Financial Advisers in a way that still guarantees that seamless experience of the in-house planner, while ensuring regulatory compliance, and putting the client first. How we got here Indemnity costs have risen by 55% from 2020 to 2022 years [1], putting increasing pressure on in-house financial planners and their associated accountancy firms. Firms are beginning to question these huge costs – how can they justify such hefty insurance fees when they advise only a handful of clients, as a supplementary service, per year? That’s not all. The Financial Conduct Authority’s Consumer Duty rules recently came into effect, with the overarching aim of setting higher and clearer standards of consumer protection across financial services. Clients’ needs and experiences are paramount. Now, even financial services providers must ensure their clients can, and are able to, take full responsibility and ownership of their financial decisions. In this regulatory landscape, having an FCA-authorised IFA partner you can trust is more important than ever. What these rising indemnity costs and new Consumer Duty rules point to is a re-thinking of the roles and responsibilities of both accountants and financial planners. And with accountants increasingly handing back the role of financial advice to trusted IFAs, there’s an opportunity here for both parties to work together in a way that puts the consumer first, and enables both accountants and financial planners to take ownership and work effectively in their respective realms. The accountant-IFA partnership Clients are looking for a more holistic approach to professional and financial advice and services. Partnerships between accountants and IFAs, when done right, can provide this. These partnerships should be viewed as a two-way relationship, where expertise is championed and shared, and the clients’ needs take centre stage. Working with a trusted IFA becomes a symbiotic relationship – one built on mutual trust and understanding, a shared knowledge of how the industry works, and – crucially – how clients should be served. At Pareto FP we already partner with 14 accountancy firms, with whom we work closely to provide clients with a full range of financial services. Our accountancy partners have entrusted their clients to us, and we take our responsibility to these shared clients seriously. In effect, our dedicated advisors become an extension of our partner accountancy firm’s team, ensuring that our clients receive the same level of service, consistently, across the firms. This holistic integration between firms and their chosen IFA is crucial. Both parties want the clients to have a seamless experience with their accountants and financial planners. When your clients trust you, they’re also extending that trust to whoever you recommend to them. After all, it’s your reputation on the line. This is why your IFA partner should be a good professional and personal fit for your firm. There should be a base-level trust, and your IFA partner should have a solid understanding of your client’s needs and expectations. When this falls into place, the client receives an unparalleled, seamless experience which can help form the basis of a long-lasting relationship between all three parties. We really underscore the importance of that relationship, and the necessity of being on the same page as our partners. We must share the same professional approach and standards, as well as a client-first culture, because we know how important it is to our partners that their clients have reputable, trusted financial advisers. Clients don’t want to spend time switching from one adviser or accountant to another, receiving conflicting advice, or feeling as if their accountants and advisers are on completely separate pages. They want a seamless, integrated approach. In this way, accountants and financial advisers working together in a collaborative partnership can be seen as an opportunity. When executed well, in a way that prioritises the client experience and adheres to regulatory requirements, these partnerships can benefit all parties equally.