Mr Smith told SMSF Adviser that while accountants may already be providing the type of advice they intend to provide under the limited licence next year, the licence will require additional processes to be incorporated into the advice they currently provide, something which many accountants are not prepared for.
“There’s a lot of activity around licensing at the moment but what a lot of accountants are not thinking through is what they actually have to do from a process perspective come 1 July,” said Mr Smith.
“All of a sudden they’ll need to have different processes because they’re actually going to need to generate statements of advice and engage with a client to ensure they’re gathering all the information they need to provide the advice.”
Mr Smith said he is concerned that few accountants have actually thought through these processes and so will not have enough time to introduce them before the accountant’s exemption ends mid-next year.
“Anyone who isn’t currently licensed won’t be following the processes they need to follow come 1 July,” he warned.
“A lot of firms will get the licensing piece right because that’s what people have been telling them to do, to go out and get the training and the right licence, but I think many of them haven’t thought about this processes piece.”
Mr Smith said the cost of certain processes is one of his major concerns.
“Many of the licensees are requiring fairly lengthy statements of advice, which could add significantly to cost and make it difficult for accountants to be able to charge their clients and recover those costs from their clients,” he said.
Mr Smith added that those who are not planning to become licensed at all may also find it difficult to provide advice that is in their client’s best interest.
“Come 1 July next year, a good accountant will be able to have a broad-based discussion with their client about everything to do with their business and financial affairs, and it will be very hard for an accountant without a licence to have that discussion without discussing things like superannuation, which is getting into the realm of needing a licence,” he said.
He concluded, however, that the licensing regime will allow more proactive accounting firms to branch out into financial planning.