The move to increase the retirement age to 70 will have a significant impact on accounting firms, both on the way they engage with an older workforce, and how they meet the needs of clients and interact with them, says Mr Tony Fittler, chairman of the Australasian association of accountants and advisers HLB Mann Judd.
“To some extent increasing the retirement age to 70 will consolidate a trend we are already seeing, that many people are working longer, as is often the case with employees and business owners.
“The contradiction to this, however, is that many professionals are also retiring early.
“For instance, partners in accounting firms are already taking early retirement. It is not uncommon for partners to retire at 57 or 58, which means there are a lot of qualified people are leaving the workforce early, and that a lot of experience is walking out the door of accounting firms.”
Mr Fittler says these partners often return to the firm as consultants, but this can have implications for the accounting firms’ own business development.
“For instance, if a partner retires, continues with the accounting firm as a consultant, but also obtains positions on a number of company boards, it means the accountancy firm would not be able to undertake audit work for those companies.
“This dilemma often impacts organisations that the firm may have worked for over many years,” Mr Fittler says.
“On the other hand, with people feeling more active and able to work for longer, if partners decide to stay on in the firm, unless the firm has successful growth and succession plans, it can block the way to the partnership for younger accountants.
“There is no easy solution, but it is an issue the profession will increasingly need to consider.”
Retirement plans can also impact on client relationships, as private clients need advice from their accountant for many years after their own retirement, Mr Fittler says.
“If their adviser within the firm retires before them, clients are accepting of change but can feel let down and find it hard to adjust to the change in continuity even though the service level is maintained.
“Succession plans are a problem for both business clients and individual clients.
“Business owners are often comforted by the presence of their accountant after their own retirement as a mentor for the children who take over the business.
“Indeed, many clients and their families will increasingly need multigenerational ongoing advice and assistance in their personal matters, especially wealth and estate management and tax affairs.
“The need for professional advice a long time into client retirement needs to be managed successfully for firms, with their own succession planning approaches covering a long term approach to client handover.
“Personal finance and tax management will be an ongoing issue for retirees throughout their retirement, and then become an issue for their estate.”
Working reduced hours as professionals’ age may be part of the solution but currently this seems to be a relatively short-term option, Mr Fittler says. He also identified continuing professional development as a consideration for practitioners who wish to work part-time in retirement.
“For accountants, it is essential to keep up to date with continuing education and professional development and being a part time accounting professional is not easy.
“Some professions, such as the legal profession, have career alternatives that can be followed as practitioners’ age. So far, there is no such avenue for accountants particularly for sole practitioner but it is a good model for us to consider,” Mr Fittler concludes.
HLB Mann Judd is an Australasian association of independent accounting firms and business and financial advisers, with offices in Australia and New Zealand.
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