Kath Bowler, CEO of Licensing for Accountants, has indicated that there is some confusion surrounding the referral arrangement process within the accounting industry, particularly as the end of the accountants’ exemption draws closer.
“Unless you’re planning on moving fully into the financial planning space, you’re going to need a solution of some kind,” Ms Bowler said.
“I don’t see the referral relationship as an alternative […] I see it as part and parcel of almost every accountant’s licensing options.”
According to Ms Bowler, accountants need to have an understanding of investment strategies they are comfortable with their clients undertaking before they decide upon a referral partner, to minimise potential conflicts of interest.
“A lot of the time, I don’t think an accountant thinks that they need an investment philosophy, because they’re not doing investments.”
Ms Bowler added: “They do need to have a philosophy that they believe in, whether that’s property, direct investment or managed funds, because if a client is looking for guidance, you are effectively giving it to them by referring to a planner that invests that way.”
Ms Bowler noted that far too many accountants are not proactive when it comes to understanding the advice that a financial planner may provide a potential client as part of a referral arrangement.
“I always tell accountants to actually ask for a copy of the statement of advice that is going to be sent to the clients, just for your own sake. It astounds me how often accountants don’t even look at a sample.”
She added: “Ask to see a typical statement of advice that would be given to a client that is seeking advice on a self-managed super fund, or to a client in their 50s who has a lump sum – just so you can see it and have that comfort level.”
“I think if accountants do their homework at the start, they will avoid problems further down the track and it will give them more comfort when they refer their clients later,” Ms Bowler concluded.
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Ralph keep on trying you grow ever more entertaining. Opinions and polls aren’t “facts”; at least if I purportedly misuse words they’re bigger than 4 letters.
Here is a ‘fact’ for you, a recent article here that headlined as “ASIC accepts enforceable undertaking from advice group” was actually an accounting firm that had conflicted interests and set up SMSF without due consideration for clients needs. Is that a gasp of surprise I hear? Of course not.
And ‘BTW’, get your ‘facts’ right, where did I actually call you an idiot? I said you & Georgie were ‘very sure’ of yourselves, the ‘fact’ that you identified with my quote speaks volumes all by itself 🙂
Oh and obviously your attention span is as strong as your IQ, go back over the comments here and numerous points have been made, albeit within layers of sarcasm but perhaps you missed them through your tears…
I will avoid making any personal insults or quoting anybody else, it has been as entertaining as it is pointless. I will stick to the facts.
There good planners and bad planners, there are good accountants and bad accountants.
Income splitting is tax advice outside of AFSL requirements, super contributions, super splitting, pension commencement are firmly in AFSL land.
For the last three years (calendar) global shares outperformed Aussie shares in each and every year. So far this year Aussie is still struggling. Stockbrokers are commission driven more than any FP.
The strong push for licensing did not come from the FPA, or other FP organisations. The really strong push came from the industry fund movement as all their large (really profitable) accounts kept leaving for SMSF’s – fixed fees no matter the balance.
The industry fund wanted to noble the gate keepers, the ALP complied (surprised I think not).
Smithy – what points? All you have done is throw insults around. I have far better things to do then trawl through a thesaurus for words which you misused anyway.
BTW – if you are going to call someone else an idiot it pays to check your spelling first.
I will leave you with a fact. In a recent survey accountants are in the top third of most trusted professionals, financial planners are in the bottom third just above used car salesmen. Perhaps having old world morals isn’t such a bad thing.
The last BDM that came into my office after waiting in the reception area and overhearing the conversation asked me if we had a stock broker now working in the firm. I replied no, that’s just the accountant talking to one of his SMSF clients. Now to Mr George Lawrence it won’t be one of those financial planners you hate, reporting you to ASIC & complaining about you.Because 100% of planners I know, value the relationship they have with their clients accountants,work with them closely for the best outcome for their clients. (unlike a lot of accountants that want 100% control).it will be Mr Lawrence competing accountancy firm who complained to ASIC saying why am I the one following the rules , paying $10K a year in fees and more in wages & yet this guy ( or like) is running his own race. I give you five years maybe 8 before your on the front page of your local newspaper for breaches of the corporations law. Where is your evidence that you are following the law will be the question?
Ralph, um yeah, great comeback, addressing all my points I see…? Reading your comments you haven’t made one factual or intelligently applied addition to the debate, so way to go in proving an aptitude for being both sequacious and a faineant which is kinda amusing given your own quote.
Here is another for you & Georgie “The sign of intelligence is that yo are constantly wondering. Idiots are always dead sure about every damn thing they are doing in their life”.
Read the comments here – you guys sound so damn sure of yourselves.
Smithy, you probably have valid points to make. Unfortunately, you disguise them with so much juvenile, patronising and insulting comments that you end up looking foolish.
As you like quotes hear is one for you that I shall apply to all your future comments “You should never argue with idiots, they bring the argument down to their level then beat you with experience.”
Ralph, sounds like your train of thought derailed; obviously there were no survivors… So accountant licensing is now linked to FP ethics somehow – um, how exactly?
In reality it came about from your groups trying a poorly thought out & executed power play when aiming to exclude ‘any’ tax advice by FP’s (which is idiotic when you analyse it), and the consequent fall out & demarcation bit you guys in the butt far more then our TASA has affected us.
From painful experience, the dinosaurs treat legal compliance as something best confined to the tea room, underneath the 1994 Women’s Weeklies.
But thanks for your attempt at a reply, this article is fast becoming the Georgie & Ralph Dinosaurs Fantasy & Comedy Show. Next we will be hearing from Barney & Dorothy as well.
Dear Scott O’Donnell, thanks for the comment. No offence taken at all. It is nice to have a civilised approach. It is true that there are rogues everywhere but rogues do not concern themselves with laws and regulations. It is the majority which then has to face the consequences of government involvement and regulation. The ICAA (now called CAANZ) approached the whole issue from, in my opinion, a totally incorrect position and lost the argument over retaining the exemption. The opposite side won the fight for the hearts and minds of the regulator. So be it. Yes, I am annoyed that I have to be licensed but I will do RG 146 and then join someone (the NTAA has obtained their own licence to help members but CANZ didn’t, couldn’t, wouldn’t) in order not to transgress. I will not give specific financial advice or any other advice which the licence doesn’t allow and live happily ever after.
George thanks for the reply. In relation to generalisations I apologise I should have stated that all accountants who I have dealt with, except 2, have the investment ability of a drunk 18 year old at the Casino. I appreciate this does not cover all accountants and for that generalisation I apologise. In relation to your other comments I regret to inform that there are a lot of accountants who have provided awful advice both before and after 2006 ranging from Agribusiness Schemes (you save tax how can that be a bad investment?) through to SMSF’s with less than $20,000 and purchasing one investment property with debt to fund your retirement. Licensing will hopefully reduce this bad advice whilst providing a more consistent compliance regime and therefore I support it. My personal opinion is no one person can do everything themselves and anyone who thinks they can master everything is a fool (I don’t think you fall into that category so please don’t take it as an insult).
Smithy, perhaps if more FP’s had “old world accountant morals” which focussed on client service and legal compliance rather then what is presumably new fashioned FP morals that focus on what can get the biggest fees for the planner none of this licensing debacle would have been necessary.
Georgie, why is the Gov bringing in these changes to your world, forcing you to knowledge up or get out of the advice piece?
Perhaps to target dinosaur accountants, say who started back in 1975, whose mantra & self justification is normally ‘But for the last 41 years I have told clients what to do” despite the world moving on from 41 years ago. It’s almost always accompanied by a mindset that to do a good job it’s fine to fudge figures for clients, despite facts.
Unfortunately the new accountability isn’t quite the asteroid that wiped out the dinosaurs, but hopefully it catches out the ignoramuses and hurts them where the old world accountant morals tend to be – in their pocket.
Please reply back, I need some light hearted distraction for a Friday afternoon, and I find your ramblings somewhat akin to a court jesters foolish ranting of old.
Dear Scott O’Donnell, thanks for the comments. It is nice to have one without insults. Forget about any of my experiences, look at the community at large. Your last sentence is a little contradictory as regards generalisations. But I think you missed the points I have tried to make. Accountants, with whom I have had dealings, do not give financial advice; they are conscious of the fact that they need to be licensed. And this was before FSRA in 2006. Planners, on the other hand, have been giving tax advice without fear or favour hence the legislative need for regulations. And I would point out that it is financial planners who now have to act in the best interest of their client and this has been enshrined in legislation. Is there another profession which has had this happen to them? Finally, please do not bring fees into the debate. The FP industry is still wrestling over commission versus fee for service: some commissions have been banned by legislation!!!
George, you must have had a really bad experience with a Financial Planner in the past. I am bitter and twisted towards the majority of accountants as I found approximately 80% of them to be incompetent however the remaining 20% are OK if you watch what you pay them and never take investment advice from them as they are worse at that than my 18 year old son. Generalisations don’t really help anyone.
Dearest Smithy, thanks for the offer of the ASIC visit. Why wait until July 1, tell them to come now. But please do not do it anonymously, be brave and tell them who you are. That way you may have some credibility. As for the other bits of your comments they are best left unanswered.
George, true to form as ever, and yep guessed you would pick option two – was never in doubt really was it?
In all sincerity, hope you enjoy the new licensing requirements, documentation and accountability heading your way.
As you obviously have all the answers and knowledge (or more particularly, believe you have all the knowledge you need, ala Martin & Nicholas quotes below) I may do you a favour and make an anonymous suggestion to ASIC to do one of their secret shadow shopping expeditions into your office, being so supremely confident you have it all covered. Watch out for any new potential clients in the next 24 months or so…
Love the Martin Luther King quote Smithy
My dear Smithy, I don’t need a high level planner (if indeed I could find one) or any level planner for that matter. I will stay with my relationships with a trusted stockbroker, a trusted insurance consultant and a few trusted solicitors. You can sling all the insults you like: it is water off a duck’s back.
George – I guessed you were old school, ‘in practice since 1975. Bet you fought against staff having computers and that new dang email thingy back in the day, too. But well done for managing to get onto this forum, that’s quite progressive of you.
Glass houses? 🙂 Our firm deals with a large number of accounting firms who ‘get it’, and solicitors. Where appropriate we convene joint meetings with these specialists and the clients to get the outcome that is most important to the clients’ desires or needs.
You can either get off your butt, out of your comfort zone to actually talk to a high level planner & fill the void in your knowledge of what they do, above and beyond investment placement, or if that’s too hard for you, remain ignorant and erroneously judgemental.
To quote Martin Luther King: “Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity”, or Nicholas Ling, “Ignorance is a voluntary misfortune”.
Dear Phil Mahboots, thanks for the reminder. And I am happy to confirm that SMSF trustees (individuals or directors of a trustee company) are independent and smart as well. After all that’s why they (most of them, yes there are a few who shouldn’t even be trustees but they have fallen to the property and other spruikers) set up the SMSF in the first place! To gain independence from the fund managers and others and row their own boat.
Jason is absolutely right. Trustees of SMSFs don’t need accountants (as long as they can do a set of financials and a tax return both of which can be readily audited) and they certainly don’t need financial planners.
Why do trustees need accountants or advisers. Just do it all online. @George I would read up a little more. Like Smithy said.
Smithy, another one comes to my, non financial planner, mind: “people who live in glass houses…”
George – the old adage “better to remain silent and be thought a fool (or ignorant) rather than open your mouth and remove all doubt” comes to mind…
Dear Adam P, let’s see. Specific contributions and income splitting are straight out of the tax sphere and covered by ITAA, TRIS and AB pensions are covered by SISA and SISR, the life insurance requirement is mandatory by legislation but in any case the SMSF trustees consult their insurance broker about this so that leaves death benefits. The tax aspects are in the legislation and the SMSF members’ solicitor covers the estate and will aspects. I think I have covered it without an AFSL.
By George Lawrence, If you really have no idea of all the technical strategic AFSL advice that an SMSF requires and you think it’s purely about investing, i’d be very worried for you and your clients.
Specific Contributions, Contribution splitting, TRIS and AB Pensions, Death Benefits, Life Insurances are all AFSL strategic, non investment advice.
Maybe George you just do all this without an AFSL ?
Its also not essential for smsf trustees to have a relationship with an accountant. If trustees are as smart and independent as you say, they just need an auditor to meet the annual requirements…
[quote]everyone assumes that SMSFs always need a financial planner[/quote]
I think it is a fair assumption that every SMSF needs an ‘adviser’.
There is a lot more to SMSF advice than just investment advice: Strategy, compliance, pensions, tax, estate planning etc.
I value Kath’s comments but I am puzzled about why everyone assumes that SMSFs always need a financial planner. In my experience SMSFs invest directly (shares, property and cash) and in these case they don’t need a financial planner. A stockbroker will cover the SoA for shares and as far as I know real estate agents don’t have to give one. So it would be essential to have a good relationship with a stockbroker, a banker and a real estate agent.
Nothing new here Kath, any decent accountant should have had that relationship with financial advisers running for a long time already.