DBA Lawyers director Bryce Figot says many of the accountants he speaks to have entered the licensing regime, but they avoid providing advice services and statements of advice at all costs because they are struggling to sell those services to clients.
“I’ve spoke to a significant number of accountants who are licensed and aren’t very keen on doing statements of advice because they feel their client won’t value the extra value that the statements of advice gives them,” Mr Figot said.
In a poll run in an online seminar by DBA Lawyers, 31 per cent of accountants said they were an authorised representative but tried to avoid providing advice services under a licence.
“A number of accountants have said to me that they’ve got the licence but they think it’s going to be a hard-sell to clients to charge for a statement of advice,” Mr Figot said.
“It’s very similar to people holding nuclear weapons … they have them, but they don’t actually want to ever use them.”
Mr Figot said these accountants are instead choosing to provide factual information or only acting on execution-only basis.
While these strategies may work for the simpler aspects of superannuation, he said it can become risky when accountants service clients this way for complex advice needs.
It is a fairly common practice for accountants who don’t want to provide a statement of advice to simply provide a template for an investment strategy, which Mr Figot said can be risky.
“One of the things that investment strategies are legally required to consider is the question of insurance. What if a client starts an SMSF and you give them a template investment strategy that says something like consider insurance … that’s where I think it really starts to get more into the realm of advice,” he said.
“Particularly something like insurance because God help you if someone actually does pass away or is injured in a way that insurance would have been triggered.”
I would suggest that providing a template investment strategy goes beyond risky and that it definitely would be taken as advice if a client acted on it and lost money, with the added complication that it is providing the same advice to all clients which puts in on par with Storm Financial. An alternative view to the fact that accountants don’t want to provide an SOA on the basis that they can’t “sell” it is that the document is unnecessary paperwork which reduces the ability of the general public to receive financial advice due to the higher cost of providing it needing to be recouped. Despite my opinion in relation to the process of giving financial advice being overly complicated the rules are that an SOA needs to be provided if advice is given, it is now up to ASIC to enforce the rules across the total industry including with accountants.
I have to concur with the SOA requirements in this area.
If accountants aren’t prepared to meet the obligation of an SOA, then GET out of the field of SMSF structures.
We need ONE structural system, under which ALL operate. The disjointed rubbish does Not work!!
It’s about time these practitioners had to work to a level playing field!