Putting Lipstick on the Pig
Talk to anyone in the accounting industry and it’s very apparent that compliance fees are falling (and will continue to fall year on year). Rob Nixon in his book Remaining Relevant, has predicted that compliance prices will plummet by 50% or more within 5 years. His predictions may turn out to be very conservative as the latest industry data shows the average business client’s fee has fallen 20% over the last 12 months.
The accounting industry is now gripped with fear and looking for new sources of fees. When the accountant’s exemption was repealed on 1st July 2016 and ‘Recognised Accountants’ could no longer recommend the establishment or winding up of a self-managed super fund many practices decided to establish a financial planning division. Accountants adding a financial planning division to their compliance practice is like putting lipstick on the pig. The new financial planning division is the lipstick and the pig is the compliance practice. The financial performance of these new financial planning divisions can be embarrassingly small. A recent survey showed the average practice had financial planning revenues of only 4% of their accounting and tax revenue. Is it worth the time, effort and money? Secondly, converting accounting practice clients into financial planning clients is harder than it first appears. Although 70% of the taxpayers use an accountant every year, only 25% of individuals use a financial planner at some time in their whole life.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2