What is a holistic accountant? What value do they provide? When to use one.

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By Stuart Wemyss. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.
The word ‘holistic’ is defined by Oxford Languages as “characterised by the belief that the parts of something are intimately interconnected and explicable only by reference to the whole.” This definition implies what a holistic accountant is positioned to offer you the most value. But not all accountants are able to adopt a holistic approach.

This blog sets out the key considerations to help you assess whether you would benefit from engaging a holistic accountant.

Taxation and investing are inextricably intertwined
Taxation is typically your biggest lifetime expense. Therefore, it makes sense that you should take steps to minimise it. This includes ensuring your investments are tax-effective. The less tax you pay, the more investment returns you keep. The more you keep, the less assets you need to fund retirement.

Take superannuation as an example. It’s a wonderful investment vehicle because its concessionally taxed at a rate of 15% for income and 10% for capital gains. However, in retirement (pension), all investment income and gains are tax free (if your account balance is less than $1.7 million after 1 July 2021).

Therefore, it is natural for your accountant to recommend contributing into super. But if your super is invested poorly and doesn’t generate any returns, the rate of tax is inconsequential. This demonstrates how intertwined tax and investing is. In this situation, you need an accountant that not only recognises the tax benefits of super, but that can also direct you how to maximise your super investment returns. Of course, there are many examples of how tax and investing are inextricably intertwined, and this is only one.

You trust your accountant
According to research, accountants are rated as the most trusted financial professionals. The main reason for this is that they are independent. Typically, they have nothing to sell to you, other than their advice.

Although, 15 to 20 years ago some accountants sold “tax-effective” agribusiness products to their clients. Unfortunately, everyone that invested lost thousands. Most accounting bodies have since banned accountants from selling products to their clients.

Back to the topic of independence. Being independent means accountants don’t have any conflicts of interest. Their only interest is what is best for you. This situation has resulted in accountants being the most trusted financial professionals.

Your accountant knows a lot about you and your financial position. Together with the trust you have in them, it puts them in a great position to help you.

What is a holistic accountant?
A holistic accountant is someone that helps you maximise your wealth on an after-tax basis. This is more than just saving tax, which is how people have traditionally thought about accountants. It recognises that no amount of tax structuring can compensate for poor quality investment or a bad strategy. The most amount of value is harnessed when the two factors are optimised. That is, when a client has high quality investments that are structured tax-effectively. The value created through optimising both is greater than the sum of the parts.

But not all accountants are able to adopt a holistic approach
There are two hurdles that accountants will face when trying to adopt a holistic approach.

The first is a lack of skill and experience. Its challenging for one person to keep on top of both tax and investing. They don’t necessarily have to know everything – just enough to identify any issues and opportunities. If they are successful investors themselves, their personal experience will go a long way to making them better accountants. And if they work in a multi-disciplinary team, including financial advisors and mortgage brokers, they will be able to workshop ideas with their colleagues.

The second major limitation could be having the appropriate licenses including an Australian Financial Services License (AFSL) to give financial advice and Australian Credit License (ACL) to give mortgage advice. These licenses are not only onerous to apply for and retain, but they are becoming more costly too. ASIC has increased licensing fees by 160% over the past two years.

Holistic accountants can work in two ways
The best arrangement that allows an accountant to adopt a holistic approach is to work in a multi-disciplinary team as it allows them to workshop ideas with their colleagues. When one firms looks after your entire financial needs, the right hand knows what the left hand is doing.

The alternate solution is for an accountant to establish relationships with professionals outside of their organisation. When their client has a need, they can refer them to the most suitable professional. Whilst this approach should work in theory, in my experience, it doesn’t work well in practice. It’s just too hard to control the process and outcomes. And open collaboration can be challenging too. That is why at ProSolution we have decided to adopt a multi-disciplinary team approach. But experience tells us that working in the same office is not enough. We must work hard (and have the right systems) at ensuring we proactively collaborate on a daily basis.

Who can benefit from holistic accountants?
Most people would benefit from having a holistic accountant. However, the more complex your circumstances, the more you probably have to gain.

Business owners and self-employed persons almost always should use a holistic accountant. The reason for this is that they tend to have more tax minimisation opportunities available to them. This means a holistic accountant can help them minimise income tax whilst allowing them to invest their profits tax effectively using the right investments and strategies.

Investors also have a lot to gain from engaging a holistic accountant. Minimising tax on investments increases your after-tax investment returns. Combining a perfect investment approach/plan with a perfect tax minimisation plan creates tremendous value.

How do you find a good holistic accountant?
I think you can guess what I’m going to say… That is, you have already found an excellent holistic accountant. Us! But if you ask me for a less selfish answer, I suggest the best way to find a good holistic accountant is by referral, as I have previously explained here.

If you would like to discuss your tax/accounting needs with us, you are welcome to email Deb Serginson. She will gather some initial information from you and introduce you to the most suitable person at our firm.

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