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Accountants are resisting institutional licensing arrangements because of concerns they may carry a stigma with clients, according to Hayes Knight.
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Hayes Knight says accountants avoiding institutional 'stigma'
24 November 2014
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9 minute read
Greg Hayes, the firm’s chairman and joint managing director told AccountantsDaily that the majority of accountants do not want to align themselves with a large institutional licensee given several recent scandals involving a number of these organisations.
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“From the accountants' point of view, in terms of being aligned to one of the large institutions, there's probably the greater proportion of accountants saying they don't want to do that.
“They see that institutional alignment, even if it is only on a limited authorisation, they actually see that institutional alignment carrying with it a perceived stigma with clients and even if it doesn't come with that stigma for the clients, accountants have that perception themselves.
“Accountants are not comfortable with that institutional alignment and tend to be looking more at non-institutionally aligned groups," Mr Hayes said.
The IPA's executive general manager, leadership, Vicki Stylianou told AccountantsDaily that while the institute is yet to see hard evidence of this trend, it doesn't surprise her.
"It doesn't surprise me if that is the case, simply because of everything going on at the moment and the problems the institutions are having with CBA and Macquarie and all that."
Despite all this, Ms Stylianou said it can be hard for accountants to resist the institutional offers.
"Price is a driver ... despite all the scandals, the reality is that quite often the institutions can offer licensing at a better price because they have scale," she said.
However, according to Mr Hayes, accountants are also resisting the institutions because they perceive pressure from the large organisations to expand their wealth offering once aligned.
“The institutions look at this and say 'If there is going to be thousands of accountants under limited authorisation we can capture them at that point under the limited authorisation piece, then that opens the door for us to take it to the next step and get them into the wealth piece.'
“The thing is, the majority of accountants probably don't want to be in the wealth space, they've already made that commercial decision for themselves and their practice, for a range of different reasons so what they're really after is that limited authorisation piece."
Guy Thompson, managing director of Rise Standard, an independent licensee, said many accountants value their independence too much to align with an institution.
"With the independent licensees there is a lot more flexibility and that's what these practices need."
"They can't afford to be boxed in because they are all kind of different, they all run a little differently," said Mr Thompson.
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