Mounting costs bode ‘unsettling times ahead’ for SMSF firms
SMSF firms are facing increased costs from both the incoming requirements set by FASEA and increased fees under the new ASIC funding model, the extent of which remain uncertain, says a licensing consultant.
Licensing for Accountants chief executive Kath Bowler said while the Financial Adviser Standards and Ethics Authority (FASEA) has now finalised the framework for new advisers entering the financial advice industry, it is still unclear what the exact education requirements will be for existing advisers under the new standards.
Last week, FASEA announced it would be undertaking a second consultation period before the final standard is set for existing financial advisers, said Ms Bowler.
While on the surface the proposed standards are better than what was initially put forward, with most accountants now only required to undertake between one to three units, Ms Bowler said there are still a raft of issues with the current proposals, including the fact there is no recognition of designations for professional bodies.
Ms Bowler also pointed out that the costs associated with the study are quite substantial with each unit of study estimated to cost between $2,500 and $3000.
For those who don’t hold a related degree and need to study a graduate diploma the costs are likely to be upwards of $20,000.
“For most accountants, our experience has been that between one and three units of study will be needed, not the full graduate diploma because they have a related degree but that’s not always the case,” she said.
Ms Bowler said she expects universities will introduce further courses aimed at meeting the requirements of the new standards, but are facing difficulties in putting courses together at the moment because it’s still unclear what the governing bodies will require.
“It’s quite an unsettling and uncertain time for everyone really at the moment,” she said.
In addition to the new standards, SMSF firms that provide advice will also be hit with extra costs from the new funding model for ASIC, she explained.
“So not only have they got the cost of doing the extra education, but there’s also costs related to ASIC’s funding model, which will charge firms for anyone who is listed on the financial adviser register,” she said.
While there’s still uncertainty around the exact figure, she said, it’s predicted to be around the $1000 mark for each adviser every year.
As a result it’s becoming quite costly to operate in the superannuation advice space, she said, particularly for accountants who are not in the space full time, and became licensed to be able to continue to service their clients for their superannuation needs.