Based on data from the Wealth Data dashboard, the number of advisers operating under a limited licence dropped by 35.32 per cent over the 2022 calendar year.
The number of advisers operating under a limited licence as at 22 December 2022 had fallen to just 630. In recent years there has been a significant decline in the number of advisers operating in the limited licensing regime with 1,608 advisers previously operating under limited licenses back in July 2021.
The Wealth Data dashboard indicates there has also been a slight drop in the number of accountants who are authorised to provide advice under full AFSLs with this number dropping from 899 down to 843.
The number of advisers across the entire adviser population fell by 7.6 per cent during the 2022 calendar year with the advice industry losing a total of 1,304 advisers.
The rate of decline was less significantly compared with 2021 when 2,445 advisers left the advice industry.
In June last year, the SMSF Association said that the limited licensing regime had failed to meet its objectives and had been rendered ineffective due to a multitude of factors.
Since 1 July 2016, SMSF professionals have been required to be licensed or authorised with ASIC either through a full AFSL or limited AFSL to provide SMSF advice services.
The SMSF Association noted that accountants who intended to give financial advice spent considerable time and money reshaping their business to meet the new limited licensing regime.
“This has involved the duplication of entity structures as a separate entity is required from which licensed advice services are to be provided. It must be clearly separate and distinct from the main accounting practice entity,” it said in a submission to the Quality of Advice Review (QAR) last year.
This duplication, it explained, has also brought a duplication of costs in addition to the costs of licensing itself.
“It also creates a significant level of complexity when it comes to providing advice services to clients. This structuring is about limiting the exposure of the AFSL to the activities of the broader accountancy practice,” the submission stated.
“Clients do not understand nor care about a firm’s structuring and simply want to obtain the advice they need from their professional adviser.”
The SMSF Association also claimed that the limited licensing regime had prevented SMSF trustees from obtaining basic SMSF advice in a convenient t and affordable manner.
“SMSF trustees who wish to seek basic SMSF advice are either required to spend significant money seeking financial advice from a licensed adviser or must act without advice,” it stated.
As an accountant who has done the right thing and taken up my ASFL I find it disheartening! We are stuck in no person’s land here. Clients still don’t understand the regulatory obligations of Accountants. Furthermore, the costs of training and fees are steadily increasing. The system is not punishing those accountants still offering SMSF advice despite not being licensed and there is very little regulatory action in this area. Either scrap the system and compensate those who have put in the time and $$$for an ASFL or the watchdog needs to become serious about making the system work.
I couldn’t have said it better myself. I am in the same position as you Lyn (other than completing an MBA). I have been in the industry and working with SMSF trustees since the early 1990s. I know that my knowledge is better than the great majority or other accountants and financial planners I have come across over the years.
I dropped the license because the whole system has become unworkable. I obtained the SMSF Specialisation and FP Diploma, but I could only advise on some matters. Although I have a strong interest in investments (and done very well in my portfolio returns), I never wanted to cross that line with my clients.
The average investor has been priced out of the market, not because most of those remaining in the wealth advisory industry are greedy, but the cost of compliance has gone through the roof. I really don’t hold any hope that this current government will make any difference to the current situation – they would be more than happy to have industry funds continuing on their merry way.
I am sorry that this has cost you dearly, it has cost me too. Not just dollars, but frustration and mental health. I wish you all the best.
Had a license. Cost me dearly – ASIC charged the same level of fees as full planners. Quite discriminatory treatment. Very few incentives. Despite the vast array of studies undertaken, Accounting, Fin Planning & Superannuation Diplomas, Degree, MBA, SMSF Specialisation, still required to undertake more studies. Whilst good for PD hours, the studies were otherwise superfluous, more time and more cost!
The Liberal Government’s knee jerk reaction and sloppy implementation has driven a large percentage of accountants who provided low-level advice, often incidentally with tax return discussions, totally out of the market. Few now maintain any extra knowledge in this area. (A resource wasted!) Planners & Accountants should have been able to provide limited advice without the Red Tape. Instead the legislation has strangled the planning industry and come close to killing it for average consumer access. A decade later we are all still waiting to see if the incumbent Government can make something workable from the carnage.