Speaking to SMSF Adviser, Claire Wivell Plater, owner of legal firm The Fold, noted there are downsides for accountants acting under a third-party licence, including the potential loss of independent status in the eyes of clients.
These are particularly pertinent for accountants, because they are typically accustomed to being able to operate as they choose, subject to the confines of professionalism laid down by their industry organisation.
“When you’ve got your own licence you can set your own policies around what it is, how you want to service your clients, what services you want to offer, the way in which you offer those services,” Ms Wivell-Plater said.
“But when you’re an authorised rep of a licensee, because they’re responsible for everything that you do, their way of managing that is to set out and document policies and procedures for the way they require things to be done.”
Ms Wivell Plater also touched on the potential issues associated with a licensee’s approved product list.
“The licensee provides you with an approved product list, and generally speaking you’re not allowed to use products that are not on the list without their approval. Often you can get approval to use other products, but you have to go through a process doing that.”
Also speaking to SMSF Adviser, executive director of Crystal Wealth Partners John McIlroy said accountants are typically “independent thinkers” and would not want to be seen to be ‘product pushing’ for their licensee.
“Accountants generally like to be seen in their clients’ eyes as being an independent party,” Mr McIlroy said.
He added that accountants are unlikely to join bank-aligned licensees, citing potential product restrictions and cultural differences.
The Fold stressed that “now is the time” for accountants to decide whether or not they are going to pursue an Australian Financial Services Licence, with the accountants’ exemption expiring on 1 July 2016.
Chartered Accountants Australia and New Zealand (CAANZ) is also calling on accountants to decide their licencing fate “without delay”.
“It’s not necessarily meaning you have to make a final decision, [but] understand that you have to make a decision. If the decision is, ‘yes, I think I will be licensed in some shape or form’, then start the training, and then after that you start going through and saying, ‘well, what is the most appropriate form for me to be licensed in?’” CAANZ’s head of financial planning, Hugh Elvy, told SMSF Adviser.
A very good point but what is the solution? I suppose this will only affect accountants who want the full licence. Thank goodness I don’t: never have and never will but I still resent having to obtain a limited licence just so that I can keep talking with clients about superannuation matters. This is the result of losing the battle to keep the so called “accountant’s exemption: a fight we should never have lost.
KMT54, you’re right, it is a tax structure. The problem is you’ve got a massive land grab for the $1.3T super pool between the ISFN, the retail providers and SMSFs. Advisers have to go through great pain to recommend a superfund to a client, accountants (currently) go through none and industry funds basically bully workers to say ‘you can’t work on this building site unless you have our superfund’ – maybe that’s what passes for advice in a unionised environment. By making it a regulated product its attempting to provide a level playing field. There are really good accountants that recommend SMSFs appropriately, but there are others flogging them to people with $20,000 in super and charging handsomely to set to them up (these are the same ones that flogged family trusts to all and sundry until the changes to the LITO stuffed them for income splitting to kids) – if it wasn’t for the rogues in any industry, you wouldn’t need regulation.
Crystal Wealth Partners John McIlroy said accountants are typically independent thinkers and would not want to be seen to be ‘product pushing’ for their licensee.
Now if that statement was correct half of the clients that lost capital when Agri Business collapsed who were advised by an accountant who by the way were pushing product, would bot have lost any capital because they would have had the acumen not to push products. So much for accountants being independent thinkers.
If an accountant becomes licesed under a verically integrated licnesee and recommends in-house product, that is perceived to be a lack of independence. So to take up John’s point that accountants are typically independent thinkers and would not want to be seen to be ‘product pushing’ for their licensee, if that firm becomes self licensed and recommends SMSFs (a regulated product) to its clients that the firm arranges, administers and charges for, does that not then create a vertically integrated licensee which is pushing its own product? Is that independent?
Surely this vindicates the current position, where Accountants are already qualified and experienced to advise on structures and they should be able to give advice on what is principally another tax structure, just like any other trust. A SMSF is just a vehicle for investment not an investment in and of itself. The whole thing has got out of hand with lobby groups with vested interests ruling the day!