11 Sep Accountants – the saving grace of the Finance Industry
All about ethics.
Finance is big business, and in Australia’s financial ecosystem one industry rules the roost…Accountants.
In August 2018 The Governance Institute of Australia released its annual Ethics Index. There should be no surprises at who tops the list – Education (81), Health (70) & Charities/ NFP’s (61) all scored well, with ambos (88), firies (85) & nurses (84) understandably the top professions. Primary schools, Medical charities & pathology topped the list of ethical organisations. Overall Australians saw our society as being only somewhat ethical with a rating of 35. Sadly far below what most of us would have hoped for and disappointing considering Australians placed a high level of importance on ethics in society (87). Given the political turmoil that has swept the country it isn’t surprising to see the Government sector sitting at 43.
Given this was prior to the last spill it would be interesting to see where that number lies now……
Sadly bringing up the tail end of ethical standards is the Banking, Finance & Insurance sector – ‘led’ by bank managers, financial planners (a bit of a surprise) and lastly, mortgage brokers.
A whopping 55% of respondents consider the industry unethical.
Mortgage brokers in particular have copped it, with the lowest rating of any industry in Australia at -12. Yes you read that correctly, negative 12.
There is no one defining point which governs how we view ethics, behaviour is probably the biggest pointer – but for brokers it could also be partially due to the Royal Commission bringing misconduct to light, partially because of UBS report on ‘liar loans’, possibly an overcrowded marketplace (too many brokers fighting for the same client) or, like many things in society, it could be influenced by media. Retail behemoth Kogan adding a home loan arm to its offering has also raised eyebrows within the mortgage broking community.
But it isn’t all doom and gloom…
Accountants stood head and shoulders above everyone else in this sector. From mortgage brokers at -12, to accountants at + 31 (and to a lesser degree tax agents at +18), the gap is massive within the same ‘financial’ sector. So why have accountants succeeded where others have failed? For one it is far easier to become a mortgage broker than it is to become an accountant. An accountant completes years of training in compliance and regulation, brokers can smash out an online course in a weekend.
A decade ago accountants were under the pump with ethical standards – they undertook large scale in-house programs of teaching ethics to staff. Ethics was not considered an add-on to the business – it was fundamental to everything they did. Accountants are also highly visible in our working lives. With businesses fast catching up to homes as our most valuable asset, accountants no longer just ‘do tax’, they often intricately work within a business, as a valued member of that business.
The evolution of the accountant
Following the GFC accountants evolved; they had to. No longer was it just about tax returns and numbers. They now provided strategic advice, planning and operational training for staff. I often talk to my accountant about my personal life and whether my values are aligning with my business goals. Accountants have become a part of the fabric of businesses. Little wonder conversations with accountants invariably turn to life aspirations, hopes and fears. They are our work exit strategy, retirement planners, chief strategists and financial controllers. Reigning us in when needed, letting us loose when we deserve reward. I don’t think this is too airy fairy but accountants are our dream makers. They are, by and large, solution focused – not driven by the all mighty dollar but by excellence in what they do.
The mortgage broking industry is still, to some degree, self-regulated. Compliance is viewed widely as a necessary evil.
There are those who would complain the industry is over-regulated and compliance heavy. I’d say to that, try being an accountant (or a financial planner). Organisations like the CPA and CAA continually provide views to the legislators & regulators and accountants regularly turn the spotlight on themselves. Accountants have their own ethical requirements on tax and other areas – these are actively monitored, and accountants who are also tax agents must abide by an external Code of Conduct (outside their own industry body) administered by the Tax Practitioners Board. Accountants also work closely with the ATO – and believe me there is not one person who wants to get on the wrong side of the ATO!
But what about the client side of the fence?
Ethics is not just about the way you act – it is about how your client acts. We interviewed accountants before deciding who we’d work with. I felt that the accountant interviewed us as much as we were them. The right fit goes both ways. When we chose who to go with (the fabulous team at Birch Glacken if you need a hot tip) they put together a great package as we were the exact type of client they wanted to deal with, a very good fit for their business. We love our accountants – something I don’t think I have ever said about a bank manager (sorry did I say that out loud?). We value their commitment to our business and us as individuals.
It’s a process we go through more often than we realise. Does this relationship fit with us? Is this decision going to help us evolve as a business and as people? Do they have strengths where we have identified our own weakness? Our decision making drivers are seldom about money.
Accountants rate highly on the trust index because of their skill, practical wisdom and commitment to helping clients achieve their goals. Many give back to the communities in which they serve, and their skills are invaluable to many worthy causes. For many people who use accountants, particularly those in the business and entrepreneurial communities, accountants are not only socially acceptable, they are critical to their long-term success in an economy under constant pressure from global shocks and local legislative changes.
In the finance industry no one is more trusted than the accountant. Referrals from accountants are treated as gold, and rightly so.
So what now?
I’m not here to debate why Australians see this sector falling behind expected standards. It is what it is – and it seems that Peter White from the FBAA & Mike Felton from the MFAA, along with the heads of all Mortgage Aggregator groups have their hands full to change the perception of the mortgage broking industry within Australia. Facebook mortgage broking powerhouse Finance & Coffee has a role to play too, whether they like it or not. Maybe it is time for ALL the industry heads to get together and find the solution. If it is behaviour, or governance, or training – let’s work together for the betterment of the industry. For the needs and expectations of the Australian public.
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Information provided by IBN Private: Alternative Funding Solutions is general in nature and does not take into consideration your personal or business financial situation. It is for educational purposes only and does not constitute formal financial advice. Before acting, you should consider seeking independent personal and business advice that is tailored to your individual and business needs.