Get a leg up on your competition - Part 1

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As the sector becomes flooded with professionals hungry for a piece of the SMSF market, Miranda Brownlee uncovers how upskilling and extra education can help you stand out from the crowd.

 

A WORD FROM OUR SPONSOR

THE RISE of the SMSF industry has been an incredible story to date. Over the past decade, growth has accelerated with more than one million Australians now a member of an SMSF, representing close to a third of the superannuation industry’s assets.

Growth in the SMSF industry is predicted to continue as more Australians look for greater control over their investment decisions to fund retirement. However, the self-managed term could be thought of as a misnomer because we know the majority of trustees seek advice from their accountants and financial advisers.

SMSF trustees expect that their advisers are able to have an informed discussion about establishing and managing an SMSF to achieve the best outcome for retirement.

For many SMSF trustees there are often questions about the best investment strategy, asset protection and which assets can and can’t be held in their fund.

There are also complexities around the definition of related parties and related party transactions, and the intricate web of in-house assets restrictions. This is where specialist SMSF advice plays a critical role, and why we continue to support the industry with a specialist course and ongoing education program.

It not only supports advisers to differentiate their offer, but enables them to have an informed and expert conversation with clients about their SMSF. It’s a conversation that more Australians want to have, and if you’re not having this conservation with your clients, someone else probably is.

PeterBurgess

 

 

 Peter Burgess

Head of Policy, Technical and Education

Services, AMP SMSF

 

 

Education is increasingly on the radar of SMSF practitioners, with the accountant’s exemption ending by the middle of next year and a greater focus within the industry on the quality of financial advice.

SMSF accountants are now considering their options in the face of the new licensing regime and determining whether they will undertake the training and education required for the limited or full AFSL, or decide to outsource to financial advisers instead.

Financial advisers, on the other hand, also need to assess their current qualifications, with government set to introduce legislation by mid-2016 that will require advisers to hold a degree. The legislation will also require advisers to pass an examination, undertake continuing professional development, subscribe to a code of ethics and complete a professional year.

Accompanying these legislative changes, there is a general movement within the SMSF industry towards specialisation, according to The SMSF Academy’s managing director, Aaron Dunn. As the proportion of SMSF specialists grows, it will be increasingly important that practitioners hold specialist qualifications.

“As SMSF specialisation continues to grow, the way practitioners position themselves as having a  value proposition that stands out from other specialists will be important as a key differentiator within the marketplace, because all of a sudden there’ll be a growing number of specialists all lined up next to each other,” Mr Dunn explains.

The Institute of Public Accountants’ (IPA’s) executive general manager of advocacy and technical, Vicki Stylianou, agrees there is a movement within the SMSF industry to provide a broader range of services to clients, which would require more advanced levels of SMSF knowledge and competency.

“There’s been a lot more pressure put on trustees through the penalty regime and that’s raised awareness of how an SMSF should operate efficiently and profitably,” says Ms Stylianou.

“In response, a lot of SMSF advisers are starting to offer broader services – whether it’s mortgage broking, finance broking, valuations or looking at some of the legal aspects.”

Also – and no doubt partly due to a spate of financial planning scandals – an increasingly savvy client base is driving the need for practitioners to be fully across new SMSF developments and strategies. In addition, says AMP SMSF’s head of policy, technical and educational services, Peter Burgess,  clients these days expect to be able to have a discussion with their adviser about SMSFs. Therefore, having that specialisation or additional SMSF related education is not just a business strategy but also a retention strategy.

“If an adviser is unable to have that conversation with clients about SMSFs, the client is more likely to go elsewhere and have that discussion with someone else,” he says.

AaronDunn 2

Raising the minimum standards

In its recent response to the Financial System Inquiry (FSI), the government agreed to implement measures to raise the education standards of advisers that were put forward by both the FSI and the PJC Inquiry into education and professional standards.

One of the measures is raising the minimum requirement to a degree qualification. Hewison Private Wealth director Chris Morcom agrees with the government’s decision. RG 146 has been around for more than 10 years, he says, and there is now a growing sentiment that advisers need to hold a higher qualification than a mere diploma.

“There’s no doubt that eventually ASIC is going to require advisers to have an equivalent degree-level education and in my view as a professional financial adviser, that has to be the minimum,” he says.

“So if you’re doing a short course today, thinking that it’ll be sufficient to get you through and keep you advising, I would take a step back and look at the bigger picture.”

Mr Morcom says it is worth spending the extra time and money doing the degree course to ‘future proof ’ the adviser’s own qualifications. Further, he believes advisers should also be required to hold a Certified Financial Planner qualification.

“If you don’t hold that qualification, then in our view, you really need to work on that,” he says.

Meanwhile, Chartered Accountants Australia and New Zealand’s superannuation leader, Liz Westover, says while the minimum standards for accountants are adequate, some accountants are failing to stay across the major complexities and issues.

While some accountants are highly proficient in the SMSF field, there are others who may want to undertake further education to stay on top of issues or outsource their SMSF clients to other SMSF professionals so they can obtain better advice.

“More broadly, I suspect there are some accountants out there that might be better outsourcing their SMSF clients who require more specialised attention,” she says.

“You may need to look at having someone within your organisation who specialises and really focuses on SMSFs, or look to potentially outsource or have a referral arrangement in place where you can seek guidance on other more complex SMSF issues.”

Bottom-line benefits of education

The key benefits of gaining further qualifications or specialising within particular SMSF services are that they differentiate a business and help to establish the SMSF practitioner as an expert in the eyes of clients.

SMSF Association director of technical and professional standards Graeme Colley says it is important that SMSF practitioners are able to offer potential clients something that is unlikely to be available elsewhere.

“If practitioners have qualifications it [also] shows to clients that they’ve got an interest in the subject and that they’ve taken study to learn about SMSFs,” he says.

CPA Australia’s general manager of public practice, Peter Docherty, agrees this is one of the main advantages of obtaining further education and specialisations. “The commercial value is you become that trusted adviser,” he says.

“You can demonstrate to the consumer that you are actually more than the run-of-the-mill  accountant or financial planner and that you have the ability to be bold and charge higher for your services – charge at a premium because people are prepared to pay a premium for good, trusted advice.”

When it comes to financial advisers, Mr Morcom adds that statistics show that those who hold higher qualifications are less likely to be involved in unethical behaviour and actions.

“The value is that you have put yourself through education to obtain the highest level of professional qualification there is for financial advisers in Australia, and it’s also a global qualification,” he says.

 

In part two of this series, set to be released next week, SMSF Adviser will look at the options on the table for SMSF practitioners looking to boost their education and specialist knowledge. 

Education is increasingly on the radar of SMSF practitioners, with the accountant’s exemption ending by the middle of next year and a greater focus within the industry on the quality of financial advice.

SMSF accountants are now considering their options in the face of the new licensing regime and determining whether they will undertake the training and education required for the limited or full AFSL, or decide to outsource to financial advisers instead.

Financial advisers, on the other hand, also need to assess their current qualifications, with government set to introduce legislation by mid-2016 that will require advisers to hold a degree. The legislation will also require advisers to pass an examination, undertake continuing professional development, subscribe to a code of ethics and complete a professional year.

Accompanying these legislative changes, there is a general movement within the SMSF industry towards specialisation, according to The SMSF Academy’s managing director, Aaron Dunn. As the proportion of SMSF specialists grows, it will be increasingly important that practitioners hold specialist qualifications.

“As SMSF specialisation continues to grow, the way practitioners position themselves as having a  value proposition that stands out from other specialists will be important as a key differentiator within the marketplace, because all of a sudden there’ll be a growing number of specialists all lined up next to each other,” Mr Dunn explains.

The Institute of Public Accountants’ (IPA’s) executive general manager of advocacy and technical, Vicki Stylianou, agrees there is a movement within the SMSF industry to provide a broader range of services to clients, which would require more advanced levels of SMSF knowledge and competency.

“There’s been a lot more pressure put on trustees through the penalty regime and that’s raised awareness of how an SMSF should operate efficiently and profitably,” says Ms Stylianou.

“In response, a lot of SMSF advisers are starting to offer broader services – whether it’s mortgage broking, finance broking, valuations or looking at some of the legal aspects.”

Also – and no doubt partly due to a spate of financial planning scandals – an increasingly savvy client base is driving the need for practitioners to be fully across new SMSF developments and strategies. In addition, says AMP SMSF’s head of policy, technical and educational services, Peter Burgess,  clients these days expect to be able to have a discussion with their adviser about SMSFs. Therefore, having that specialisation or additional SMSF related education is not just a business strategy but also a retention strategy.

“If an adviser is unable to have that conversation with clients about SMSFs, the client is more likely to go elsewhere and have that discussion with someone else,” he says.

Raising the minimum standards

In its recent response to the Financial System Inquiry (FSI), the government agreed to implement measures to raise the education standards of advisers that were put forward by both the FSI and the PJC Inquiry into education and professional standards.

One of the measures is raising the minimum requirement to a degree qualification. Hewison Private Wealth director Chris Morcom agrees with the government’s decision. RG 146 has been around for more than 10 years, he says, and there is now a growing sentiment that advisers need to hold a higher qualification than a mere diploma.

“There’s no doubt that eventually ASIC is going to require advisers to have an equivalent degree-level education and in my view as a professional financial adviser, that has to be the minimum,” he says.

“So if you’re doing a short course today, thinking that it’ll be sufficient to get you through and keep you advising, I would take a step back and look at the bigger picture.”

Mr Morcom says it is worth spending the extra time and money doing the degree course to ‘future proof ’ the adviser’s own qualifications. Further, he believes advisers should also be required to hold a Certified Financial Planner qualification.

“If you don’t hold that qualification, then in our view, you really need to work on that,” he says.

Meanwhile, Chartered Accountants Australia and New Zealand’s superannuation leader, Liz Westover, says while the minimum standards for accountants are adequate, some accountants are failing to stay across the major complexities and issues.

While some accountants are highly proficient in the SMSF field, there are others who may want to undertake further education to stay on top of issues or outsource their SMSF clients to other SMSF professionals so they can obtain better advice.

“More broadly, I suspect there are some accountants out there that might be better outsourcing their SMSF clients who require more specialised attention,” she says.

“You may need to look at having someone within your organisation who specialises and really focuses on SMSFs, or look to potentially outsource or have a referral arrangement in place where you can seek guidance on other more complex SMSF issues.”

Bottom-line benefits of education

The key benefits of gaining further qualifications or specialising within particular SMSF services are that they differentiate a business and help to establish the SMSF practitioner as an expert in the eyes of clients.

SMSF Association director of technical and professional standards Graeme Colley says it is important that SMSF practitioners are able to offer potential clients something that is unlikely to be available elsewhere.

“If practitioners have qualifications it [also] shows to clients that they’ve got an interest in the subject and that they’ve taken study to learn about SMSFs,” he says.

CPA Australia’s general manager of public practice, Peter Docherty, agrees this is one of the main advantages of obtaining further education and specialisations. “The commercial value is you become that trusted adviser,” he says.

“You can demonstrate to the consumer that you are actually more than the run-of-the-mill  accountant or financial planner and that you have the ability to be bold and charge higher for your services – charge at a premium because people are prepared to pay a premium for good, trusted advice.”

When it comes to financial advisers, Mr Morcom adds that statistics show that those who hold higher qualifications are less likely to be involved in unethical behaviour and actions.

“The value is that you have put yourself through education to obtain the highest level of professional qualification there is for financial advisers in Australia, and it’s also a global qualification,” he says.

In part two of this series, set to be released next week, SMSF Adviser will look at the options on the table for SMSF practitioners looking to boost their education and specialist knowledge.

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