Xenia Taliotis 4 Apr 2018 03:53pm

Artificial intelligence: keeping accountants relevant

Personal finance is changing and the role of accountants with it. Xenia Taliotis explains how ICAEW’s Personal Financial Planning Community supports members through a new financial landscape filled with exciting opportunities

Caption: Illustration: Thomas Pullin

Technology has eroded some of the profession’s fundamental services,” says John Gaskell, head of personal financial planning at ICAEW. “Accountancy has changed so much over the past decade or so – because of IT, but also because of different regulations, so our members can no longer bank on, say, tax returns and audits. With artificial intelligence likely to take on more tasks, diversification becomes more important. Firms that embrace the future and opportunities available to them will succeed. Those that don’t will stagnate – or worse.”

Gaskell and his team have spent the past year working on a plan to promote one such opportunity – personal financial planning. It is, says Gaskell, an important growth area and one ICAEW has identified as a key service in its Tomorrow’s Practice project. One initiative has been the Personal Financial Planning (PFP) Community (icaew.com/pfp), which provides content and insights on, for example, pensions, estate planning and probate, with the intention of encouraging members to move from providing a business-focused advisory service to a whole life one.

“The idea is to encourage members to take on a role that is more akin to a personal finance director or concierge,” says Gaskell. “Accountants can provide clients with a more rounded assessment of how they can achieve their life goals – how they can retire early, sail the seven seas, buy their children a property – and the PFP Community wants to increase awareness of what else accountants can do to aid clients and retain their business.”

It’s not about turning accountants into financial advisers, but about supporting them to step up to the next level, perhaps by becoming DPB (Designated Professional Body) licensed – or at the very least adapting so that they become goal-based planners. “Accountants need to engage on a deeper level. They have the skills, they just need to deliver them in a different way. We want them to place their clients’ goals at the top of their planning, and then to create a collaborative circle of professionals who can pick up the baton once accountants have gone as far as they can.”

As an example, Gaskell cites the 400,000 or so people in the UK with money purchase pensions who will be hitting 65 in the next few years. “Every one of them is going to need help, and many of them will visit their accountant first. Members need to be prepared for this – not with a copy of the Yellow Pages, or access to Google, but with a network of professionals they can bring together to assist their clients.

“We don’t want them sending people off on their own to financial advisers; we hope they will act as a professional bridge to these experts. That way, they can act as the linchpin or chair in a collaborative process that keeps them at the centre of the client relationship they have spent years establishing.” Gaskell led the project to produce the Lifetime Wealth Planning Guide: Unlocking the opportunity.

In this, Peter Pickle, a fictitious but typical fiftysomething small business owner with a family, demonstrates how easy it is both to lose clients and, on the flip side, to gain them. The scenarios show Peter going to see his accountant about numerous financial matters, including early retirement, administering his recently deceased father’s estate and ensuring his mother’s finances are in good shape. He gets no joy from the long-established accountant, who sends him on his way with the business cards of three financial advisers, so he goes to another firm. The partner there prepares a personal finance balance sheet for him; runs through a life-time cash-flow analysis and tax affairs; recommends specialists from his network – people he works with already; and can apply for grant of probate as well as handle Pickle Snr’s estate.

Ultimately, says Gaskell, “practitioners cannot bury their heads in the sand. If you can’t help your clients achieve their life goals, they will go elsewhere and you risk making yourself redundant.”

Nigel Hutchinson, who contributed to the Lifetime Wealth Planning Guide, and who is a private client partner at Mazars UK, says that accountants have been so stymied by the stringent rules of the FCA that they are stopping short of where their skills and regulation allow them to go.

“Becoming an FCA adviser is a hugely onerous commitment, and that is not what ICAEW is proposing. There is a happy half-way stage that members can occupy, which will still open up new revenue streams for them and enable them to take the role of a trusted adviser to its full potential,” said Hutchinson.

At its most basic level this involves little more than taking a holistic view of clients’ situations and building a full picture of how their personal and business lives co-exist. “Financial planning is all about understanding an individual’s life goals and working out how much wealth is needed to achieve them. Accountants do this every day for SMEs – they look into the future to see where the business wants to be and they draw up the best and most efficient route for getting it there. Planning out a road map for a client’s personal goals is no different. You still rely on the same financial modelling skills to create a strategy for goal realisation. It’s only afterwards that you must introduce your clients to someone who can choose the products that will make that happen. You should be the designated person forging new relationships between them and the specialists you’ve recommended to them. That’s what being a trusted adviser is all about.”

But how do accountants new to financial planning know when they are about to cross the line into areas that are regulated? The answer is simple – they refer to the booklet ICAEW has put together. Personal Financial Planning: Traffic Light Guide to Regulation is available from the PFP Community site and highlights what accountants can and can’t do, topic by topic. Under Pensions, for example, it says that having a factual discussion about the tax treatment of pensions and general information on the different pension schemes is unregulated; explaining and evaluating advice given by an authorised firm requires a DPB licence; while recommending that a client buys a specific pension product requires FCA authorisation.

Accountants who are DPB licensed can work closely with an FCA authorised firm to provide clients with more comprehensive financial planning services. Nick Reynolds, senior manager, professional standards, ICAEW, recommends firms that want to follow this route get a DPB licence. “There are rules to follow, but it’s a light touch regulatory regime and not a difficult or expensive licence to get. I do think that without a licence, accountants who want to be a trusted adviser to private clients are operating with one hand tied behind their back. The introduction of pensions freedoms means that individuals need impartial advice more than ever. DPB licensed firms can work with financial advisers in a way that unregulated firms can’t to provide their clients with the best possible service. Our profession is so focused on adding value that I think remaining unregulated is a missed opportunity.”

Occasionally, accountants go the whole way to become FCA authorised. One person who did is Richard Bertin, now a partner at wealth management company Stonehage Fleming, which provides planning and investment advice to high net worth individuals.

Bertin has seen how things operate in the US and says UK accountants could learn a lot. “CPAs [Certified Public Accountants] have grasped that they need to offer an integrated service and have achieved what many practitioners here in the UK are struggling with – blending the human touch with technical expertise. It’s not enough to be a genius with numbers and strategy – you also need to be able to draw out what your clients want from life, what their aspirations and hopes are, so that you can make the numbers pay for those dreams. That’s what an integrated service achieves.”

Accountants already have the skills and information about their clients, so it’s pretty simple to use that knowledge to ramp up their services and keep an individual’s business within the profession, says Bertin. Granted there will always come a point when the client will need to see a financial adviser, but good accountants can postpone that point by doing more of the planning themselves. “When your clients ask if you can help with x, y, z, your answer should either be ‘yes, I
can do that’ or ‘yes, I can introduce you to my colleague who’s an x, y, z specialist’.

“Financial planning is a fantastic opportunity for accountants to provide a holistic cradle to grave service and to put themselves not only in the heart of their clients’ business but actually in the heart of their lives.”


In August 2014, ICAEW became the first organisation outside the legal profession to gain the power to regulate probate. Since then, hundreds of practices have obtained accreditation, as Patricia Adair, regulatory policy manager, professional standards, ICAEW, explains.

“Probate gives practices the opportunity to expand their services in a very natural way. Many accountants are already providing tax planning and estate accounts services and therefore have detailed knowledge of their clients’ businesses and estates. It therefore makes sense for them to be able to provide a fully joined up service to their clients when administering estates.

“Take-up has been good and thus far, something in the region of 300 firms have applied for accreditation. Firms can gain accreditation either by becoming an authorised firm that requires all principals and owners to be authorised individually or by becoming an Alternative Business Structure (ABS), which requires at least one principal to be authorised. Authorisation is therefore suitable
for smaller practices, and ABS for larger ones.

“The application process is not at all onerous, though of course applicants must ensure the individuals needing individual authorisation go through training and assessment before applying.”

Full details can be found online at icaew.com/probate

Personal Touch

Accountant Steve Pipe, FCA, researcher, author and practice strategist, has personal experience of acting as a personal finance director.

“Last year, I saw at first hand what financial planning can achieve. My mum was diagnosed with motor neurone disease and though the news was devastating, we drew comfort from the fact that my parents had had 20 years of post-retirement happiness together, thanks to a rudimentary spreadsheet I drew up for my dad that showed he could retire early. That basic financial model remains one of the most important things I have done in my 30 years as an accountant.

“Two decades on, there is even greater need for accountants to position themselves as personal finance directors and to change our thinking from results-based outcomes to goals-based planning. We must do more on a micro-level for individuals and more on a macro-level. The truths are that we have just come out of the worst recession since records began; public finances are a mess; real wages have fallen; and it’s harder than ever to get a mortgage. When interest rates go back up, that’s going to cripple many people with mortgages; if we take national debt as a whole, each family has spent £102,000 more than it’s paid in. We’re going to have pay that back, plus interest.

“We are going to have to pay more into the system and get less out. Not only that but we’re living longer, and are retired for longer. Retirement is more expensive than it’s ever been, and pensions freedoms has created a minefield. Added to that, retirement savings income is at an all-time low.

“This all adds up to an explosive cocktail of financial issues and with no nanny state to bail us out, each one of us has to take responsibility for our personal finances. To do that, we need great advice from an accountant who has the necessary skills and wherewithal. Accountants can make a profound difference and the PFP Community can help them do more for their clients and for the wider world.

“It is a hugely important and exciting initiative, one that makes accountants aware of how much
they can do. Good financial planning is good for clients, good for the economy and good for the profession.”