Wealth management – a position of trust

On the surface, corporate collapses and scandals would appear to be unceasing in their pernicious effect on the image of accountants. Therefore it wouldn’t be a great surprise if accountants were as trusted as politicians, estate agenst or even journalists.

And yet for the rest of the industry the negative effects of the accounting scandals appear to have remained concentrated within the Big Four. Indeed accountants’ popularity as most favoured adviser to businesses and individuals alike has survived relatively unscathed.

They consistently come out on top of surveys ranking those advisers people most trust with their money. And it is this notion of trust that is making accountants increasingly the first port of call for the UK’s high net worth individuals for advice in personal wealth management, from inheritance issues to estate management.

‘It’s an obvious business opportunity,’says David Harvey, chief executive of Steps – the Society of Trust and Estate Practitioners. ‘With the devolution of wealth in the UK, wealth management is a lucrative service line for accountants.’

Firms have long been involved in wealth management, but recent years have seen a growth spurt in the number of firms that are branching out into this field or beefing up an exciting service line.

John Endacott, partner at Winter Rule and South West representative of the ICAEW tax faculty, says: ‘It’s a strong area of growth and has been a profitable area for many firms.’

Social and economic developments in the UK over the past few decades have, of course, a large part to play in accountancy firms’ expansion and success in this service area.

It is estimated that roughly 335,000 individuals in the UK each have assets, other than property, of around £1m. And this is a figure that is only set to grow.

Besides the growth of a well-heeled proportion of society, the ongoing breakdown of the traditional family unit means that managing high net worth individuals’ financial matters is increasingly complex.

Accountants’ broad, technical training places them on the top rung of skilled advisers able to deal with increasingly complex personal wealth-management issues. A growing focus on so-called soft skills in accountancy training has also become an essential tool when dealing in sensitive family matters. ‘The sort of principles that accountants have grown up in, audit trails and other technical issues, means they have a better understanding,’ explains Endacott.

Joss Dalrymple, head of personal tax and trust administration at Smith & Williamson, agrees the step from business adviser to personal adviser is a natural one.

‘If you’re doing the tax returns on an annual basis, it’s easier for us to be proactive in any other advice, especially about a person’s assets,’ says Dalrymple.

Rather cynically perhaps, the wave of pension and mortgage misselling cases that have destroyed people’s life savings, children’s inheritances, not to mention their trust in other advisers, have indirectly helped accountants grow as preferred advisers in this field.

‘People think accountants are good people because they have long-standing relationships with them. The financial services industry has been discredited in many ways over the years,’ says Endacott.

The continuity of service between accountants, their clients and the big-picture knowledge is another reason why more and more practices are building up their service arms around this area of expertise.

Nigel Birch, a partner at top 20 firm Kingston Smith, says: ‘We are perceived to be there for the long term. IFAs can often be perceived as only a single-transaction based service.’

‘With the knowledge of clients’ circumstances that we have, it makes it easier to work in-house on their personal assets as well as their business. We have a broader picture,’ Birch adds.

Another way of looking at it, as Dalrymple puts it, is that accountants are increasingly becoming people’s financial GPs.

There are pitfalls though, warn some financial planning experts. In particular, the cost of regulation and the time needed to comply with rules overseen by the Financial Services Authority are not to be sniffed at.

‘Regulation isn’t that onerous but it’s difficult to deal with it efficiently. People can’t just change on a whim. The larger the firm the easier it’ll be. Of course it’s easier for smaller firms if they’ve got a critical mass of high net worth individuals,’ says Endacott.

Another alternative to setting up the service arm in-house is to develop a partnership with other specialist firms. But, warns Endacott, take care to heed ethical guidelines and ensure transparency for clients.

Tim Gregory, partner at Saffery Champness, adds: ‘Client confidentiality would be an issue. And credibility. You would need to a create brand and awareness among clients.’

Wealth management is a growing, lucrative service line for accountants. It is one that could well rival corporate finance and audit in its fee income. There is a but: as with all business ventures, it can only return the high margins needed to make it worth the effort with sound planning and strict recruitment processes. Otherwise it could end up damaging the firm itself.

Looking to switch advisers?
If you have capital to invest, or are the owner of a growing business, the financial options open to you are likely to be relatively complex.

If it’s a one-off transaction and you doubt you’ll be seeking further advice again soon, experts recommend looking to your independent financial adviser or bank – but remember that product sales, and not just advice giving, is key to their businesses.

And because of the differing quality of service the best place to go is to the Association of Independent Financial Advisers, which represents about 75% of the IFA market (

If you’re looking for a long-term relationship with an adviser who can deal in more than one complex issue then you could do worse than turn to your accountant. You can count on clear regulation and disciplinary procedures should anything go wrong, and the qualifications are considered to be the best in the business.

However, be prepared to pay much larger professional fees – but if your accountant is dealing with all your business and personal needs then they will be less likely to do anything to damage that lucrative relationship.

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