Speaking to SMSF Adviser, Sydney Financial Planning principal William Bracey said the pricing models currently being used by SMSF practices generally do not include all the costs involved in establishing and running an SMSF, only the cost of services provided by the firm itself.
These concerns come as ASIC releases guidance with proposals to impose specific disclosure obligations on advisers who give advice on SMSFs.
The guidance specifies the types of risks and costs that an adviser should consider, discuss and then disclose to clients when advising on setting up, or switching to, an SMSF.
Mr Bracey said this is leaving clients with a false sense of what they will actually need to pay.
Determining the correct pricing has been a challenge for his own firm since the firm initially wanted to be completely transparent around SMSF costs.
“We were going to market saying, ‘Here are all the fees starting from scratch – you have to pay your trustee fee, your set-up fee, your ASIC fee’. And we included all the accounting fees as well because we were trying to show clients what they really had to pay,” says Mr Bracey.
“Then we looked at what everyone else was charging and we were miles ahead – at first, we couldn’t work out why we were so expensive.”
Mr Bracey said the firm later realised it was because the business was including everything – even the accounting set-up – and was being completely transparent.
“We want what’s in the best interests of the client rather than saying, 'well, we’ll give you the financial planning real cost and the accountant will charge you here – so instead of $5,000, it’s actually going to cost $8,000,” he said.
“But if I came back to the client and told them it was going to cost $8,000, they’d say that’s ridiculous so realistically we’ve had to come back to the market and do what everyone else does because otherwise we’re just not that competitive and no one will talk to us.”
Mr Bracey said this lack of clarity around costs is holding the SMSF industry back.
“People like me are working very hard to turn this industry into a profession, and if we’re going to be a profession we need to act professionally – not telling the client the whole story is not professional,” he said.
Mr Bracey said that just because everyone currently operates in this way does not make it acceptable.
“Just because everyone else speeds 10 kilometres over the speed limit doesn’t make it right; it just means everyone else does,” he said.
“Someone has to show leadership, and we need to bring accountants and financial planners together to get a better outcome. We need to be working together not against each other."