Many people assume that accountants should also be world-class money managers. But to succeed in the profession, you’re inevitably likely to be time-poor. And time is the secret ingredient for optimising your wealth.
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The old saying ‘the cobbler’s children have no shoes’ dates back to the mid 16th century. But it’s a truism today: if you’re busy making a living in a profession, you don’t always have the time to apply your skills to your own circumstances.
For accountants, it is often personal finances that suffer. You might have risen the ranks specialising in audit, consultancy or M&A – in which case planning the financial implications of life decisions might not be core to your skillset. Even if you have the latest tax codes.
But the biggest issue we encounter with accountancy firm partners isn’t lack of knowledge. It’s lack of time. The profession can be all-absorbing; in more senior positions, client and team management, high stakes, and hard work dominate your headspace.
If we’re being frank, the issue for partners with less well-optimised portfolios is often apathy. There’s a natural disinclination if your income is robust to tackle issues such as retirement and estate planning when, well, ‘maybe it can wait’. And when we’ve been called in to help partners facing a house move, change of job, an inheritance, a bonus or other significant life event, it’s often because only then do they feel they need outside help.
These inflection points sharpen the mind – often because money is more visible when there’s more of it, or sudden need for it (for school fees, say, or buying that holiday cottage). Reaching partner is an especially interesting time. That’s not just about a bump in salary and bonuses.
Partnership means your peers are also better off, and expectations about lifestyle might change. For accountants later in their career, there’s also a major inflection point on the horizon that makes deferring planning less of an option: retirement.
One problem is that professionals often do seek some help earlier in their careers and assume that their wealth continues to be well-managed as they climb the professional ladder. Here’s where our teams tend to encounter two other issues.
The first is that what suits you as a junior in a firm – with a decent income by society’s standards, but far off what you’ll end up drawing – probably won’t be right for you as you progress. It’s not just promotions, a second home, or school fees. It pays to re-evaluate your overall objectives as you get older.
We’ve worked with lots of accountants who assumed they would keep going as a partner until retirement, for example – then realise in middle-age that perhaps a change of pace feels right after years of hard graft.
The second is that time-poor professionals often don’t realise that the fee structure they agreed to as a junior might leave them struggling with, to put it delicately, ‘value for money’ as their wealth has grown.
We recently started working with one accountant who had taken on an adviser years ago because they were used by colleagues. But the fee structure was geared to a much smaller portfolio, and this accountant never had the time to look again at the arrangement. We were able to save them £14,000 a year simply by updating the approach.
Let’s be clear: this isn’t necessarily overcharging by the adviser; and it’s certainly not negligence by the client. It’s just a question of getting someone to make a proper re-evaluation of wealth management needs and objectives.
That’s not to say there isn’t a massive risk in letting things slide. We worked with one client and realised they’d missed out on £250,000 of portfolio value simply because some relatively straightforward steps hadn’t been taken since they last looked at their personal finances. It’s never too late (or too early, to be honest) to avoid these situations. It boils down to four steps.
For Isio, great technology, deep market knowledge and the DNA of senior accountants in our own toolkit makes a huge difference. But establishing a trusted relationship via that conversation is what ensures advice is timely, impactful and frees them up to achieve their broader personal and professional goals.
When Vanguard surveyed clients this summer, they found advised investors are roughly half as likely (14%) as self-directed ones (27%) to experience high levels of financial stress; and 76% of advised clients say advice saves them time, not just generating them additional returns.
That’s something even the most successful accountants can’t buy.
