Financial service firm Fiducian has turned its focus from acquiring financial planning practices to accountants but not for the purpose of creating a one-stop shop or a referral-generating business.
"Our focus will be more on accountings and in fact, we're in discussions," Fiducian managing director Indy Singh told InvestorDaily.
"The main thing here is to make sure you can run an accounting practice well, which is what we had done when we developed [its accountancy services organisation] Fiducian Business Services."
However, the purpose of building its pure accounting arm was not to become a one-stop shop but to effectively have a profitable accounting business in its own right, Singh said.
"A lot of people say they want a one-stop shop so they buy an accountant or lawyer and for many, they don't capitalise on it," he said.
"Also, if I'm buying an accounting practice, I'm certainly not buying it because we're going to get referrals."
In response to the growing interest of advisers looking to acquire accountants primarily to benefit from referrals Singh said they will soon find themselves unstuck.
"If advisers make a decision to buy an accounting firm for the sake of getting referrals, they might be a bit disappointed," he said.
"The first and foremost issue is that if you're getting into an accounting business, understand that you're getting into an accounting business not a referral generating business."
Advisers must also make sure that an accounting acquisition will deliver good returns to the investor and not just the principal of the accounting practice, he said.
At the start of the year, Singh told InvestorDaily that further acquisitions of financial planning businesses could be on the cards, after it added State Trustees in January.
"The only place we can make acquisitions in are in bite-sized chunks of client bases but there are risks because you've got to be very sure of how those clients have been invested, issues in the statements of advice and what quality of advice was given," he said.
In addition, the vertically aligned company Fiducian is hoping to capitalise on its administration system, back office and financial planning software, Singh said.
"We're now trying to capitalise on it and starting to build up discussions with a couple of groups who might want a badge, a joint venture or some [arrangement] where we can apply our admin system," he added.
