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Profile: ‘Financial advice has been like a swear word to accountants’

Critchleys chief executive on how accountants have finally grown to respect financial advisers

Relationships between financial advisers and accountants range from the good, the bad to the downright ugly. Some advisers talk fondly of their experience running an advice service out of their local accountancy firm’s offices, while others recall joint ventures that failed due to the firms involved targeting different sets of clients, or a straightforward culture clash.

With a foot in both camps, Critchleys chief executive Jason McGuigan understands the benefits and challenges of bridging the gap between advice and accountancy. Having spent the best part of 20 years building the financial planning arm of the Oxford-based accountancy firm, he was promoted to run the group as a whole in 2017.

“I’m not an accountant and previously I ran a team of seven financial planners, so to run a business of 120 staff is not without its challenges,” he says.

Given McGuigan’s financial planning background, does his appointment as chief executive signal it is playing a bigger part in the group’s offerings to clients?

“In the 21 years since I started running the financial planning business, it has become an important part of Critchleys, both in terms of the income it generates and relationship cross-fermentation,” he says. “There are a lot of synergies between the two. Income from financial planning is 15 per cent of the total income and we manage £130m of client money. It is reasonably strong.”

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McGuigan says being given the role shows his partners at the firm understand the benefits of being able to offer clients financial advice. However, he admits that has not always been the case.

“I’ve faced the same issues as other advisers,” he says. “It was difficult to get engagement from the partners 20 years ago because ‘advice’ was more like a swear word to accountants.

“They did not have a great deal of respect for advisers, who were just regarded as pension salesmen.

“But now the direction is going towards more and more quality, and over time accountants have realised how different advice is to their perceptions. It’s not about selling pensions and other products, it’s about long-term planning.”

McGuigan feels his biggest turning point was getting involved with the Institute of Financial Planning.

It meant that he was able to demonstrate the focus on planning to his partners through the use of cashflow modelling during the advice process.

McGuigan points out accountancy firms face a potential decline in income in certain areas. For example, the government’s Making Tax Digital initiative aims to make it easier for people to keep track of their tax affairs through online record-keeping and submission of tax returns, making traditional annual returns a thing of the past.

Offering financial planning is one way for accountancy firms to diversify and fill that gap in income.

“Historically accountancy is a rear-view mirror, where you’re dealing with things like last year’s tax returns and auditing last year’s accounts. If accountancy firms’ income becomes less reliant on that ‘compliance income’ they will need to generate future income from tax planning and advice,” he says.

But despite the great strides made to prompt accountants to rethink advice, McGuigan is not fully convinced that it has become a profession.

Five Questions 

What is the best bit of advice you’ve received in your career?

Where things can be technically complex, keep it simple.

What keeps you awake at night?

My wife’s electric fan.

What has had the most significant impact on advice in the last year?

Mifid II has had, and will continue to have, a significant impact on financial services, especially from January when the new transparency of reporting comes in.

If I was in charge of the FCA for a day I would…?

Listen to advisers a bit more.

Any advice for new advisers?

Get excited – the future is very bright.

Will a new adviser exam impact professionalism?

“I think it will remain both an industry and a profession. To explain that, while investment providers and insurance companies regard financial planners as a distribution arm to sell their products, it will always remain an industry,” he says.

“But on the flip side of that, holistic financial planners, where planning as opposed to products drives the process, should be regarded as professionals.”

McGuigan “fell into financial services” in 1988, having left school at 16 to work in a shop.

A friend who worked for life insurer General Portfolio got him an interview, but McGuigan did not realise his new job was a commission-only sales role.

By 1995, he had settled down and started a family, which meant evening and weekend work no longer suited him. So he joined Abbey as a financial adviser. Within a year he was promoted to a training and development role and became more interested in qualifications.

“I started studying for the AFPC off my own back and realised Abbey’s advice was basic,” he says. “I wasn’t finding it stimulating as I had gathered the technical knowledge and how to use it.

“In 1997 I read a job ad for Critchleys in Oxford to set up an IFA business. I thought with my AFPC I had to have a good chance.”

One of the big decisions McGuigan has agonised over in his time at the firm is going restricted in 2016. But he is in no doubt now that he made the right choice.

“The company was directly authorised for 17 years as an IFA and with that responsibility came regulatory oversight and regulatory fees. I saw more of my time spent on regulatory matters and compliance, and our fees rose year on year because of misselling scandals you bear the brunt of even though you’re not involved,” he says.

“I thought either I have to recruit someone to do the compliance or we increase fees, or find another way.”

CV  

1997-present: Director then head of financial planning, Critchleys. Chief executive from 2017

1995-1997: Financial adviser then insurance development manager, Abbey National

1988-1995: Self-employed financial consultant

Why I went restricted: Three advisers share their stories

That “third way” was joining a network.

“I can’t say we’re independent but we still offer whole-of-market advice. So, in terms of clients’ experience, that hasn’t changed at all,” he says. “When you’re part of a network, they take on the compliance oversight and risk in terms of the advice we give. People now have access to their pensions at 55 because of the freedoms but that could be the next misselling scandal. Having all that risk on my shoulders would be a worry.”

Now, McGuigan is bringing soft skills – the mainstay of financial planning – into Critchleys’ wider business.

He says: “We’re focusing on staff development, questioning skills and fact-finding skills, as accountants have not traditionally had that level of experience and training.”

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