Episode Details

The word ‘holistic’ is defined by Oxford Languages as “characterised by the belief that the parts of something are intimately interconnected and explicable only by reference to the whole.” This definition implies what a holistic accountant is positioned to offer you the most value. But not all accountants are able to adopt a holistic approach.

This blog sets out the key considerations to help you assess whether you would benefit from engaging a holistic accountant.

Taxation and investing are inextricably intertwined

Taxation is typically your biggest lifetime expense. Therefore, it makes sense that you should take steps to minimise it. This includes ensuring your investments are tax-effective. The less tax you pay, the more investment returns you keep. The more you keep, the less assets you need to fund retirement.

Take superannuation as an example. It’s a wonderful investment vehicle because its concessionally taxed at a rate of 15% for income and 10% for capital gains. However, in retirement (pension), all investment income and gains are tax free (if your account balance is less than $1.7 million after 1 July 2021).

Therefore, it is natural for your accountant to recommend contributing into super. But if your super is invested poorly and doesn’t generate any returns, the rate of tax is inconsequential. This demonstrates how intertwined tax and investing is. In this situation, you need an accountant that not only recognises the tax benefits of super, but that can also direct you how to maximise your super investment returns. Of course, there are many examples of how tax and investing are inextricably intertwined, and this is only one.

You trust your accountant

According to research, accountants are rated as the most trusted financial professionals. The main reason for this is that they are independent. Typically, they have nothing to sell to you, other than their advice.

Although, 15 to 20 years ago some accountants sold “tax-effective” agribusiness products to their clients. Unfortunately, everyone that invested lost thousands. Most accounting bodies have since banned accountants from selling products to their clients.

Back to the topic of independence. Being independent means accountants don’t have any conflicts of interest. Their only interest is what is best for you. This situation has resulted in accountants being the most trusted financial professionals.

Your accountant knows a lot about you and your financial position. Together with the trust you have in them, it puts them in a great position to help you.

What is a holistic accountant?

A holistic accountant is someone that helps you maximise your wealth on an after-tax basis. This is more than just saving tax, which is how people have traditionally thought about accountants. It recognises that no amount of tax structuring can compensate for poor quality investment or a bad strategy. The most amount of value is harnessed when the two factors are optimised. That is, when a client has high quality investments that are structured tax-effectively. The value created through optimising both is greater than the sum of the parts.

But not all accountants are able to adopt a holistic approach

There are two hurdles that accountants will face when trying to adopt a holistic approach.

The first is a lack of skill and experience. Its challenging for one person to keep on top of both tax and investing. They don’t necessarily have to know everything – just enough to identify any issues and opportunities. If