Why you need a Financial Planner even if you have an accountant

You and your business are different entities.

It is common for business owners to mix their thinking around personal and business finances. While business finances get a lot of attention both from owners, employees and accountants, the owners’ finances are often ignored or put aside because they don’t have the time or energy left to sort them out properly after a busy work week. Their priorities often lie in running the business and managing the ups and downs.

Recently q4 financial Director Kelly Hill wrote an article – Getting the personal finance basics right for business owners, in which she outlined the importance of paying yourself, contributing to your super, managing debts, and more. The points in this article touch on the need for business owners to seek financial planning advice on top of the accounting services their businesses require.

 

Knowing the differences between accountants and financial planners.

What the difference is between accountants and financial planners is a common question for many and one that is worth exploring.

Business accountants typically focus on a business, its accounts, and tax obligations. They are a critical partner in ensuring a business is compliant and can assist in understanding cash flow, budgets, and other business financial responsibilities. The role of a business accountant usually doesn’t usually extend to giving personal strategies, investment advice, or pathways to achieve personal future goals. This is because an adviser needs to be separately licensed to provide personal financial advice.

A financial planner will take a more personal look at a person’s circumstances including their business. Financial planners don’t just consider one’s income and expenses. They will look take into consideration the client’s stage of life and their future goals such as retirement or passing the business on to the next generation. They look at the full picture and consider family situations such as education costs, plans to upsize or downsize their home,  super, investments, and personal insurances. Given the full picture, a financial planner will work with a client to develop a workable strategy to achieve their future goals.

 

How this works in practice.

Often I come across business owners that don’t have sufficient assets that can be sold down in a short period, should their business be going through a tough patch.

While having investment properties outside of the business is great for diversification they can’t be sold quickly nor can only part of the property be sold! Building a passive investment portfolio, for example, cash, bonds, listed property, listed infrastructure, and shares, that can be readily accessed at short notice can provide peace of mind to a business owner for downturns and unplanned expenditure. These investments can be fully or partially sold down to meet business cash flow shortfalls and provide valuable extra time to let the business recover. In time, the portfolio may also be used to provide an income stream or be transferred into super for retirement. Also, it often has the extra benefit of reducing the need for personal insurances (i.e. Life, Total and Permanent Disability and Trauma) savings costs.

The other common scenario I come across is business owners who are not paying themselves as much super had they been an employee. This is understandable particularly early on when they are building their business, paying down debts, and building higher cash reserves. At some point though, provided the business cash flow allows for it, adding more into super makes sense. It is a very tax-effective strategy, most likely the best structure to save for retirement, and is protected from creditors.

 

Where we can help

Having a comprehensive and effective financial strategy that considers your circumstances and stage of life, can not only strengthen your financial security but allow you to achieve your wealth goals. Our insights and understanding of wealth management options, coupled with our team’s accounting and financial planning expertise, provide the foundations necessary to create, preserve and protect your wealth. Also, we help you make more informed financial decisions and to keep you on track to achieving your financial goals. Our role is to ensure regular reviews are completed and actioned.

As a Senior Financial Advisor heading up the q4 financial wealth management division I take great pride in the work we do here to provide our clients with comprehensive and integrated tax, accounting, and financial planning services. If you are interested in having an informal chat about how we may be able to help you please contact us at admin@q4financial.com.au  

 

This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.

Q4 Wealth Management Pty Ltd, ABN 18 634 775 830, is an Authorised Representative of Hunter Green Pty Ltd, ABN 12 087 491 629 AFSL No. 225 962.