Speaking in a webinar, Licensing for Accountants chief executive Kath Bowler said SMSF practitioners operating under a licence need to ensure that when they’re providing advice that the recommendations match what the client wanted to achieve.
“We've actually been doing some reviews of statements of advice where there are some recommendations about insurance but the client never actually asked for insurance,” explained Ms Bowler.
“Don't put in a recommendation when that was never an objective that was agreed to in the scope.”
If the client wanted to review whether they should have individual trustees or a corporate trustee structure, for example, the objective would be that the client wanted to undertake a review of their trustees, and the practitioner would address this as a recommendation to move from individual trustees to a corporate trustee, she explained.
Ms Bowler said that the objectives and the reasons for your recommendations can change during the course of a conversation with a client.
“A classic example is where the client comes in and they ask for say an income of $200,000 [from their account-based pension] but by the end of the meeting they actually want $240,000, so you recommend $240,000,” she said,
“It happens very, very often, where the recommendation and objective don't match, and it’s a really easy thing for ASIC to pick up on,” she said.
ASIC, she said, may question why the objective doesn’t meet the recommendation, but it’s simply because the conversation changed during the hour-long meeting.
“It's important just to make sure that the two match-up and to cross-check back at the end of the meeting,” said Ms Bowler.