Speaking on the SMSF Adviser Show podcast, Smarter SMSF chief executive Aaron Dunn said that while he is in favour of accountants being able to broach some areas that are considered financial advice, “the context of accountants being able to provide advice is probably too broad of a term”.
“The reality is, yes, we will allow accountants to be able to provide advice, but you need to have a specialist skill set to be able to operate in essence under some licence framework,” Dunn said.
“So as was the case that we’d seen with auditors, for example, when ASIC began to regulate them and the SMSF Association has been quite forthright in this view as well, is that it should be limited to those that have the specialist skills to be able to provide the appropriate advice.”
Following Financial Services Minister Stephen Jones’ December announcement of greater detail on how the new class of advisers (NCA) would operate under the government’s proposed reforms, the SMSF Association argued the role accountants could play was still being overlooked.
SMSFA chief executive Peter Burgess said at the time there is no argument reforms are needed to reduce the cost of advice and to open up new channels of professional advice, however it remains a mystery as to why accountants aren’t being considered.
“It was our contention that the Quality of Advice Review neglected the significant role accountants can play in addressing the growing advice gap, and the government is perpetuating this oversight,” Burgess said.
“By giving accountants a defined advice role, it will further support consumers to access the advice they need when they want it from their choice of trusted adviser.”
Appearing on The ifa Show at the end of December, shadow financial services minister Luke Howarth said the SMSFA is “on the right track there”.
“At the end of the day, I respect accountants significantly,” he said.
“My experience with accountants is they’ve provided good advice. They’re often people that you go to if you want to look at setting up a self-managed super fund and they’re qualified people that know tax law inside out.
“So, giving a little bit of advice, I don’t fear that at all from accountants and I think it probably should be looked at.”
According to Dunn, providing advice at the same level as is being suggested for NCAs is something that should be available to accountants.
“Now does that relate to the establishment of a fund? Maybe, but it should relate to things that this sort of new class of adviser role was talking about – being able to make contributions, being able to discuss maybe starting a pension, all things that come under the financial product framework,” he said.
“But and an accountant is ideally placed to be able to talk about those because there are layers of tax implications and things to be discussing and the accountant in many instances doesn’t actually want to handle client money, they just want to be able to talk to them through the strategic aspects of that advice.
“So, in that sort of framework, to me, the accountant absolutely provides an appropriate role. But once you sort of move into the handling of client money, so that includes super switching and so forth, well, then there is a higher bar that needs to be considered in respect to those that can then provide advice around those different aspects.”
The key, Dunn said, is making sure there are appropriate guardrails in place around who can and how that advice is provided.
“I know there are financial advisers in the industry that will have a very different view as well, and I guess that’s part of the discussion about how long is that piece of string or rope that you actually provide,” he said.
“But I certainly think there is a level of rope that should be available to appropriately licensed and qualified accounts to be able to do that role.”
Few firms will be interested.
Those that are, will already be licensed.
The “offerings” for accountants will be the bottom end. The work, may be interesting and helpful, but will be unprofitable under current legislation.
This makes it charitable work.
Perhaps that is where the government needs to look. Anglicare, Sommerville, and other Community based services. With a pro-bono, or low fee obligation and government support and a no-prosecution mandate because the advisor cannot handle any money.
We’ve been down this road before with limited licensing. As long as any accountants carve out is regulated by ASIC, accountants would be best to steer clear.
The problem with any heavily Government regulated industry like financial advice, is that the mandated procedures are a “one size/client” fits all model. A Govt could not really design a system any other way. As an adviser you will do it their way or the highway.
An accountant is like a medical specialist. You tell them your issue and they offer a considered solution based on qualifications and years of experience.
Forcing anyone to document and justify any advice from the ground up is an unprofitable waste of time and resources. It a wonder that financial advisers can survive at all under such a nanny state.
When your doctor tells you what is wrong with you, do you tell them to prove it? No, you take their professional advice.
The Government should get out of the financial planning business. Let the financial advice industry regulate itself. There will always be “shonks”, but if you take a tenth of the expenditure wasted on ASIC and Government regulation, it could create a fidelity fund that would more than take care of that.
The drafting of the proposed laws indicates that the new class of adviser be restricted to APRA regulated entities so, in line with the underlying ALP objective to provide superfunds with the authority to advise, accountants were overlooked. Definitely an agenda here.
As to the extent of advice matters that accountants could be authorised to provide, it probably needs to have a strong tax basis – concessional contributions are the obvious and, the starting of a pension the other. Low risk and generally about tax management.
As to non-concessional contributions, source of funds is important and cashflow modeling required. Advising on the establishing a SMSF requires financial advisers to compare across the existing fund and one other. So, if accountants were prepared to up the anti, somewhat, in the supporting documents for extended super advice, it could work.
Financial advisers are drowning under regulation and oversight and until there is some relief, other less onerous advice models shouldn’t be contemplated.
At the end of the day though, the current Minister was schooled in the union movement and has very tunnel vision about “financial services”. If it relates to an industry fund, then all good. Other than that, little understanding and unfortunately, little interest.
Nailed it Kym. Why would union funds want accountants in the space they want. That’s why advisers are so persecuted. They want all the money for their own snouts. Accountants are just more competition.
The other aspect with rollovers that accountants simply can’t do is insurance. Most/many funds have insurance. This Is a speciality with a minority of actual financial advisers. The complexity is really quite extreme and the potential for bad client outcomes is very high and the consequences are also severe for the client. This means also high risk as a consequence for the adviser be they an accountant or a financial planner. I would estimate 95% of our business and compliance risk is life risk insurance and less than 5% investment risk for the firm.
Successive governments are like a series of yes minister episodes. More Australians need advice so the government must act.
Why is that?
Cause there aren’t enough advisers and they are too busy.
Why is that?
Massive over regulation and pointless compliance exercises that change every 18 months.
Why is that?
The government did it to make advice safer. But now it’s so safe no normal citizens can access it, only the wealthy.
Why is that?
So Union funds get all the money.
Why does the government want that?
Unions sponsor the Labour Party. And the liberal party were too stupid to ask the proper questions.