The SMSF software provider conducted research with actuarial certificate provider ASAP Actuarial and found that one-third of new SMSFs and half of new SMSF pensions were set up with no statement of advice (SOA).
Over two-thirds of accountants surveyed in the research said the main reason for their client not getting an SOA was because they were reluctant to pay, while 50 per cent said their client did not trust advisers.
A further 50 per cent said the client felt the SOA added little value to the process.
While many accountants who were licensed under limited licensing helped their clients through this process, 60 per cent said they were concerned or very concerned about doing this with no SOA in place.
BGL managing director Ron Lesh said the results indicated the SMSF advice process was broken, given that many clients were against getting an SOA even if it was primarily delivered online.
“Everyone agrees the current system for SMSF advice is simply not working,” Mr Lesh said.
“ASIC’s shadow shopping each year provides predictable poor compliance results and now even the Treasury has realised this is something in desperate need of repair.”
Mr Lesh referred to the recent discussion paper released by Treasury which raised the option of returning the accountants’ exemption, and preceded a review of the Tax Practitioners Board for which submissions have recently closed.
He said BGL was in favour of returning the exemption, given the feedback from accountants around restrictions with the present licensing process.
A previous survey from BGL conducted in 2018 with 1,200 accountants saw 60 per cent of respondents say the current licensing regime was “poor, expensive and ridiculously onerous”.
Over 40 per cent of accountants in the survey did not hold a financial services licence; however, 60 per cent indicated they provided SMSF establishment, contribution, pension and wind-up advice.
The only things proven by this article are that accountants are providing unlicensed advice, ASIC know it and are doing nothing about it and BGL is trying to pump up some business.
[b][i]”Over 40 per cent of accountants in the survey did not hold a financial services licence; however, 60 per cent indicated they provided SMSF establishment, contribution, pension and wind-up advice”.[/i][/b]
Thanks Ron, your research has very clearly highlighted the huge amount of accountants providing Illegal zero AFSL compliance Advice. And that’s just the 20% that admitted it in the survey.
No doubt the level of Illegal zero AFSL compliance Accounting Advice is far higher than this.
And why has ASIC never busted 1 single Accountant for Illegal AFSL advice ? Not 1.
Congrats to BGL for taking the lead on this important issue. It is true that the current compliance regime is far too expensive and onerous for SMSFs. The cost of doing an SoA to establish a SMSF is north of $4,000 if done properly. With then the extra cost to create the fund the overall cost is getting prohibitively expensive and is likely to threaten the growth of SMSFs into the future. We need to find a better way.
However, the other point that should be made is that well considered and constructed holtistic advice is very valuable. Some advisers are taking the opportunity when discussing SMSFs to have this broader discussion across the client’s whole retirement planning and insurance needs. The end result is that additional value is created from the advice given. In that context, more is delivered for the cost and the client receives a better outcome. Crescere Partners which is building joint ventures with accountants to create accountant branded financial planning arms is very committed to ensure these high value client outcomes are achieved.