• Lead Advisor Role

  • Introduction

    Many accountants are being asked to change how they operate because of the licensing changes.  It has been well publicised that the ‘accountants exemption’ for providing financial advice on SMSF is to be removed from 1 July 2016. From that date onward if you want to continue this advice you will need to hold or operate under a full Australian Financial Services licence (full AFSL) or a limited AFSL (limited licence). 

    To date research shows that the uptake of the limited licensing has been slow with many accountants considering their positions and some reluctant to get dragged into the AFSL licensing regime. It is this latter group that this paper aims to help.

    Further compounding the potential loss of SMSF advice revenue is the ATO's compliance automation technologies (myGov Portal and Standard Business Reporting). These scheduled changes could also have a negative impact existing practice revenues. Factors such as these mean that accountancy practices need to identify ways to generate new revenue streams.

    It is also widely accepted that accountants are the logical “trusted advisor “by clients.  The challenge however is being able to identify what new services are required by which clients and how to efficiently deliver these  services.  The work is there – we just need to be able to deliver it profitably and with confidence.

     The first step to help practices identify new revenue streams is the process of organising and cleaning up the client database, segmenting clients into individuals, family, entities and   primary assets. Clients are also should be organised into Client Profiles and Professional Service types. Client profile segmentation begins with understanding their Life stages which can then be  matched with all of the potential professional service options that are available within that life stage. There are some excellent software packages available which use this client base segmentation data to produce opportunity recognition groups, within which new revenue streams exist. These reports are then used for strategy planning and potential target market identification

    The next stage isOpportunityconversion which can be supported by automated  referral partner  and EDM (Electronic Direct Marketing)  systems.  The key is having a system and a champion to drive it. 

    The right software will empower the accountant to be in control of the entire client engagement, which is currently not possible with most practice management systems. This can provide a new revenue stream for managing the client engagement as the lead adviser. The accountant concentrates of their competencies and refers the balance to competent collaborative advice partners.

    No AFSL compliance requirements are needed by the lead adviser in this advice role.

    The lead adviser role

    Rather than  the accountant taking on the all responsibility for providing advice  , you could become the lead advisor  which we will now  explore in some detail.

    1. The lead adviser takes the lead role in managing the outcome of a client engagement. The lead adviser advises on their competencies and delegates the other advice needs to trusted collaborative advice partners.


    1. In pursuing engagements we need to recognise that all advisers support the profitability of all participants in the engagement and each adviser must have a clear understanding of:

    -          The overall budget of the client

    -          The overall work requirement of the client

    -          The charging and pricing model of all advisers

    -          An accurate cost plus model for the current work that allows project contribution profitability to be managed.


    1. Legal and compliance ramification need to be considered namely:

    -   Are they suitably qualified to do the job?

    -   What referral agreements are required to spell out the expectations?

    -   What other compliance issues need to be considered?

    -   Do the referral partners have suitable professional indemnity insurance?


    1. The scope of works needs to be documented and agreed by the client and include:

     -   Time frames for the works completion

     -   Regular updates and communication to the client

     -   System to support the engagement process i.e. Facts Online

    -    Action to be taken on the non-performance of a referral partner


    1. The charging framework for the lead adviser can depend on the complexity of the          engagement.  It can also be based on the ongoing commercial relationship with the client. Where the lead advice is part of the commercial relationship understanding then it is included in fees charged for that service. Where there is no service understanding that involves lead advice then a charge out basis needs to be agreed as follows

    -   The role can be charged out as a single event and would be at the normal agreed charge rate

    -   The role could be included in a broader service offer where the accountant assumes the role of trusted financial adviser. Research shows that many clients are seeking this type of service because they lack the time and or expertise to manage their own personal/ family financial and wealth needs.

    -  The charge out rate for the trusted advice role can be priced at up to 1% of assets or a three level fee structure of $12,000, $24,000 or $50,000 plus depending of the complexity of the needs to the client. Current accounting service and priced in addition to this service or can be packaged into a total service.  These guidelines are on an annual basis and generally paid monthly.


    The lead advice role provides a new revenue source opportunity for accountants that do not want to become part of the AFSL regime.  This can be done without lowering the quality of practice advice to your client in fact the reverse is the case. The accountant keeps control of the client relationship whilst delivering a new revenue stream in challenging times. Central to managing the process is having access to software systems to uncover client opportunities, manage outcomes and especially the referral management framework .

    Matthew Brannellyof Orbit Strategies is a specialist  at developing and implementing the lead advisor processes to professional firms and is available  for an obligation free consultation on 0419 222 344 .