Accountants cautioned on dealer groups' motives
Accountants should be careful entering into licensing agreements with larger dealer groups since some of these organisations may be offering licences for the wrong reasons, one business consultant has warned.
Speaking to SMSF Adviser, Mayflower Consulting's director, Sarah Penn, said that while an organisation may seem to be offering a licence because they want to support accountants in providing excellent SMSF and financial advice services, this could be likely to change.
“A few years down the track, when those dealer groups aren’t making any money and are burdened because they’re running a dealer group at a cost, the will may turn around into more of a sales approach,” she said.
Ms Penn said that given that dealer groups often struggle to make money from licensing fees alone, it is difficult to see the longevity of a dealer group business model that does not make money through other means.
“If I ran a big institution and was looking around at all the things that were costing money and that had risk, I would look at a licence that wasn’t actually delivering a decent level of income to the business or cross-sell and think, 'what am I doing with that?'” she said.
“There’s nothing evil or nefarious about that; it’s just business.”
Despite this, Ms Penn said that if accountants do find themselves under a licence that is a bad business fit, this does not necessarily mean they are forever stuck with that particular licence.
“Changing licensees isn’t the biggest deal in the world and I think that’s an important thing for accountants to remember, whether they choose to license themselves, [choose] not to become licensed, or obtain a licence through a large institution or smaller group,” she said.
“It’s not a quick process and there’s a bit of pain involved, but I think the level of scrutiny of licensing at the moment is making people feel if they don’t get it perfect now the world will end, when it’s really not the case.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.