‘Cherry-picking’ QAR recommendations dilutes impact

The federal government accepted (in full or in principle) 14 out of the 22 QAR recommendations for the overhaul of financial advice recommendations.

In its written response to the QAR, the government laid out its priorities for reform, which include increasing the pool of qualified advisers, streamlining documentation requirements, and expanding access to retirement advice by enabling superannuation funds to provide more information to consumers.

Mr Haramis said he used the term “cherry-picking” to describe the government’s response because they have not implemented all the recommendations.

“The QAR recommendations were crafted in such a way that it is a package to ensure that we can deliver more affordable advice to individuals who need it the most,” he told SMSF Adviser.

“Splitting these up could potentially dilute the effectiveness of the recommendations as crafted by [head of review] Michelle Levy. I think there’s consensus that in doing that, it prolongs the implementation of all the recommendations if they are accepted by the government.”

Mr Haramis is in the process of moving ahead with establishing the Australian Digital Advice Association (ADAA), along with fund manager abrdn and fintech firms Ignition Advice, moneyGPS, and Advice Intelligence.

He said if the QAR recommendations are implemented as a package, it could accelerate the timeframe in which digital advice is viewed as a “mainstream player”.

Mr Haramis added that the purpose of the digital advice association is to ensure that everyone who delivers digital advice is using the right type of technology that qualifies as digital advice.

He said moneyGPS delivers a fully client-led journey by undertaking a strategic review of the client’s situation covering best interests duty and product recommendations while delivering a personalised, tailored statement of advice that is compliant with the product recommendations.

“I’ve seen several groups who claim they deliver digital advice when they don’t,” he said.

“That muddies the water and confuses the discussion. It lends itself to concern and hesitation in using digital advice providers because clients may be unsure about who’s delivering the genuine product.”

Haramis echoes stance on accountants

The final QAR report also said there is “little merit” in holding a limited AFSL but opted against recommending changes to the advice accountants can give.

While Ms Levy acknowledged the accountant’s role in assisting clients with their financial needs, she said that did not mean that they should be given an exemption from the framework that regulates the provision of financial advice.

“They have expertise in tax matters. Tax is a critically important aspect of superannuation, but the matters that are relevant to a decision to establish and maintain a SMSF and to rollover superannuation into a SMSF are much broader than those relating to tax,” Ms Levy said.

“Advice on superannuation products, including interests in SMSFs, is financial product advice. It should be regulated as financial product advice. I do not see any reason for making an exception.”

Mr Haramis echoed these sentiments, stating that while accountants are proficient in delivering tax advice to clients in relation to their SMSF or superannuation, strategy recommendations differ significantly from tax advice.

“I would hesitate to give a full exemption to accountants because of that very reason,” he said.

Extending tech to SMSFs

Mr Haramis also spoke about the accountantsGPS’s platinum partnership with this year’s SMSF Adviser Technical Strategy Day, where he will be presenting on the fintech firm’s advice technology capabilities for accountants who service clients with SMSFs.

Earlier this year, SMSF software provider BGL Corporate Solutions (BGL) added accountantsGPS to its suite to offer its clients an SMSF check-up report. This can provide an analysis of a fund’s compliance and financial situation to evaluate how the fund is progressing in key areas.

“What we’re trying to do is offer accountants the technology to enable them to have deeper and constructive discussions with their clients on how to better position their SMSFs to ensure they achieve their long-term financial objectives,” Mr Haramis explained.

He added that events like the upcoming technical strategy day are vital to provide the SMSF industry with the latest updates (given they are responsible for a quarter of all super fund assets) while accountants are key to providing tax advice and advice on how clients could maximise contribution strategies.

“SMSFs can't be ignored as much as some areas of the financial services industry would like to,” he concluded.

To hear more from George Haramis on how technology could enhance an accountant’s ability to deliver tailored guidance to SMSF clients, come along to the SMSF Adviser Technical Strategy Day 2023.

It will be held at the following locations:

Tuesday 17 October at Four Seasons Hotel, Sydney

Wednesday 18 October at Rydges Southbank, Brisbane

Wednesday 25 October at the Grand Hyatt, Melbourne

Click here to book your tickets so don’t miss out!

For more information, including agenda and speakers, click here.