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SMSF clients reject licensed advice
SMSF clients are rejecting the financial advice licensing system regardless of whether or not their accountant is qualified under limited licensing, according to new research from Apricot Actuaries.
The group carried out research with 322 accountants and found that the cohort had established a total of just 655 SMSFs in the last 12 months, which averaged out to be around two SMSFs per accountant, and assisted with 949 pension commencements, an average of about three pensions per accountant.
Respondents reported that a significant proportion of their client base was not interested in getting full advice, with 35 per cent of the new SMSFs set up in the last year not going on to get advice, while 55 per cent of pension clients also opted not to get advice.
Apricot Actuaries chief executive Jim Hennington said the lack of take-up of formal advice among SMSF clients was surprising and would make it difficult for accountants to see the value in getting a licence.
“The average number of transactions per accountant is low... at this rate, it would take years to acquire sufficient practical experience in the application of the new laws and even longer to amortise the cost of acquiring and maintaining technical proficiency,” Mr Hennington said.
Respondents to the research said in cases where their client did not get licensed advice, 66 per cent said it was because the client was reluctant to get extra fees, 53 per cent said the cost of advice was too high and 51 per cent said the client did not trust advisers.
A further 83 per cent of accountants said they provided tax advice and factual information to assist their clients in at least some of cases where the client didn’t have a statement of advice.
Mr Hennington said the results revealed that limited licensing was not working as intended by the corporate regulator.
“When the accountants’ exemption was repealed in 2016, it appears that ASIC was labouring under a bizarre belief that SMSF trustees would trust and voluntarily choose to pay for licensed advice under a framework riven [by] scandal and, in relation to which, the holding of a licence provided no impediment to unethical conduct,” he said.
“If ASIC removed the exemption to improve the quality of advice received by SMSF trustees, it has failed. In fact, it has increased the risk that trustees will not receive any advice other than tax advice.”
Just stop calling SMSF's a product0- This article accurately reflects my experience as an accountant working with SMSFs. The red tape has failed in its objective.0
- Surprise, Surprise..... ASIC fails to make a good decision. Never seen this before.0
- Dear Jim, yes Financial Advice is way over the top with BS regulation and costs.
But that does not mean Accountants should be providing bucket loads of illegal AFSL Advice with zero AFSL compliance as was the case with the massively abused old accountants exemption.0 - I applaud Mr Hennington’s group for undertaking this survey.
It is important to be able to provide quantitative support to prove that the removal of the accountants exemption has left many SMSF trustees in a gaping advice hole.
The Government & their regulators did not have the mandate or political will to impose mandatory financial advice on SMSF trustees or prospects, preferring to dance around the professionals servicing that industry with threats and intimidation.
This Country was built by “do-it-yourself’ers”, in small business.
Such people, which represent the majority of SMSFs, are intent of doing it themselves, EVEN if they get it wrong...whether that be in business or their super.
Australia decided decades ago to allow DIY/SMSF. Now that it represents 1/3 of the country’s super wealth, the regulators need to back down on hoping that the phenomena will go away, or that they can regulate it out of existence.
Go back to your political minders and tell them it’s not working. Ban SMSFs altogether, or come up with a workable solution that actually fits with the real World.
Repealing the accountants exemption so that SMSFs have access to professional advice is step 1.
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