Speaking on a panel at last week’s Financial Services Council annual conference, Mr Lane noted there are around 10,000 suburban accounting firms in the country.
Even if half of those are not of a scale to be doing much SMSF work that leaves 5,000 firms with an average of around two accountants per firm doing some SMSF work, he estimated.
That makes 10,000 potential new entrants to advice and even if only half of those take up some form of advice licence, that would mean an additional 5,000 practitioners giving licensed financial advice on top of the base of around 15,000 to 17,000 advisers currently.
Mr Lane described this as a “conservative” estimate. “It’s a huge opportunity to add to the amount of advice people are getting,” he said.
“[Accountants are] going through a very interesting process right now as they think, ‘Do we want to provide limited advice?’ which the accountants’ licence will let them do, or ‘Do we want to give full holistic advice?’” Mr Lane said.
“As an accounting firm, when you look at the risks going forward, there’s a lot of compliance work and tax work which potentially goes away over time.
“You’ve got a very loyal bunch of customers who are interested in sharing information with accountants and have been asking accountants for a number of years: can you please provide us with financial advice?”
However, Perpetual chief executive Geoff Lloyd noted that many accountants may fall out of the advice regime because it will no longer be feasible to be a “part time” planner.
“As many accountants will enter as will leave,” he said. “You can’t be a part-time financial planner every second Friday [and say] ‘I give advice in a professional way’.”
Mr Lane seems to think that accountants who are accredited to provide limited advice is empowing those to enhance the opportunity for growth in SMSF business.
As I understand this change, there will no longer be an accountant exemption to having the otherwise obligitory advice accreditation resulting to a lesser number of accounants in the future SMSF space who previously were able to so.
It also places the future accredited accountants to become compliant in providing such advice in which case more time and process will be manditory, adding greater cost pressures within their practice.
In addition to this, there are a greater number of financial planning practices occupying the SMSF space who are already able to provide full holistic financial planning advice and fully focused on this area of financial services.