Speaking at the launch of the Vanguard and Investment Trends 2015 Self-Managed Super Fund (SMSF) Report, based on a survey of almost 4,000 SMSF trustees and 501 financial advisers, Investment Trends’ head of research, Recep III Peker, said that fewer SMSF trustees are intending to approach financial planners and other guides for investment advice.
The proportion of SMSF trustees with unmet advice needs intending to approach planners and other guides such as specialist super consultants has fallen from 70 per cent in 2014 down to 54 per cent this year.
The proportion of SMSF trustees turning to accountants providing tax advice and accountants providing investment advice, on the other hand, has increased from 50 per cent to 52 per cent.
The survey results also indicated that the proportion of SMSFs using a financial planner declined again, from 41 per cent in 2014 to 36 per cent this year.
Mr Peker said the main areas of unmet advice needs that SMSFs were willing to pay for were typically in strategy-related areas such as inheritance and estate planning, SMSF pension strategies, age pension, offshore investing and asset protection.
The interesting thing about the results, he said, is that accountants do not traditionally provide advice in these types of areas.
“The area that more accountants provide advice on than financial advisers is tax planning, and you would expect that, but all the other areas financial advisers really stand out on, especially things like advice on ETFs, investing for regular income, retirement income product selection and protecting assets and income against market falls,” he said.
“So accountants can actually win from partnering with financial planners to provide a more holistic offering to their clients who have all these unmet advice needs.”
Mr Peker said the positive news is that financial planners are working closely with accountants.
“We now find that only 16 per cent of SMSF advisers don’t have any accountant relationships, down from 22 per cent in the previous year,” he said.
“It’s really important for them to work together but we generally find they’re moving in this direction.”
The suspense is killing me: I have to know. Is Jimmy Neutron a pseudonym?
They are not folksy tales GeorgeVC, but thanks for the put down.
I have first hand experience with an accountant out in the Hills. An accountant that dabbled in planning. Saw him a few years ago when I worked as a BDM. His was upset when i told him the platform didnt pay? comms, he had to set the fee. He told me that he’d invested $10M in client’s money in Wilmot Forests and they sent him a cheque for $1M. “How good was that” he said. “That was my first year, I did even more the next year….”
So this guy was degree qualified, a member of one of the professional bodies, licensed through one of the smaller, non-bank AFSLs but still thought it was Ok to pump a truckload of clients cash into agri. He got paid a motza and the clients got a tax deduction (in his words). So I don’t think he was sucked in by someone who is regulated by ASIC (whatever the hell that meant to imply)
Mariel, you must be kidding! Most accountants I know help a client set up a SMSF at the client’s request. An account doesn’t (can’t!) receive commissions, unlike financial planners, so what’s in it for them? Nothing. The only advice accountants give is based on taxation benefits. Oh, and I almost forgot, the clients want to be in charge of their own affairs and not pay exorbitant fees to fund managers and others. And if they lose money at least they don’t have to pay fees to add insult to injury.
Not sure if GeorgeVC and George Lawrence are the same poster, but my previous comment was directed to George L.
George VC, I cant agree with your comments more. The regulatory framework has changed to the extent that it is very difficult to offer the type of advice you are outlining and which many clients want.
Good luck getting the ‘nanny like connect the dots system’ changed with the Union Funds, Labor, Greens, CHOICE and the like going down the road of promoting a ‘nanny like connect the dots system’.
My concern is that SMSF’s are being established under the recommendation of accountants, when clients had no initial intent of setting up an SMSF in the first place. Maybe this explains the increase in accountants providing SMSF advice?
Why don’t more SMSF trustees use planners? I would have thought the answer lies in the first 2 letters “sm” which stands for self managed. Of course trustees need help but in the main they are educated, they know what they want and they would rather that they played with their own money. But let’s face it: most funds invest in shares, cash and property or a combination of these. For shares they go to a stockbroker, for cash to a banker and for property to a real estate agent. Where does a financial planner have a role in any of this? I suggest not much.
As accountants now have to be, from 1 July 2016, licensed I am sure some will go all the way and get their own licence. Does it not strike anyone else that, if ALL accountants were to get their own licence the financial planning industry would de decimated? So, rather than planners continuing to criticise why don’t they come to their senses and work with accountants? Oh, I suppose that, as 85% are owned by banks and insurance companies, the accountants would have none of it due to fee and independence issues.
Thanks Jimmy, but it continues to amaze me that when one tries to make a cogent argument in this debate, the best FP’s will do is regale us with their folksy tales of a bad accountant down the road.
If you read what I said, in my opinion the system you work under is now unnecessarily cumbersome and dated.
You wanted accountants under your licensing regime, so expect that we will have an educated opinion about what we find. The FP system assumes that you and the client are both idiots. We would give both of you more credit than that. If you are a smart FP, you should resent this nanny like system and the time and cost it imposes on you, when you know you are quite able to give professional advice without turning a client inside out on paper just to please ASIC.
As to your tales of accountants and tax effectives, I dont know any credible accountant who would ever recommend these, unless the poor fool was sucked in by someone who is regulated by ASIC.
I am not having a crack at anyone. Merely pointing out that when it comes to legal matters, go see a competent lawyer. In particular, if you want proper legal advice on estate and tax planning and what you can or can’t do onshore or offshore legally with or without an SMSF, you go see a competent lawyer because, if you get it wrong, it will end up in Court, so much better to get competent legal advice first to avoid such an outcome – whether it’s a question of you going to gaol or a will being overturned or a super fund benefit going to the wrong persons.
I was on the ACT Chapter Committee of the FPA and its Technical Committee so I know there are good financial planners around but good planners are smart enough to know when a client needs proper legal advice.
George and Terry, look at you two having a crack. Good to see that at least each of you acknowledge that a percentage of practitioners in your particular fields are dishonest, unethical or just shonky. Neither of you bother to quantify it, just imply “its only a small percentage”.
Its an interesting point George that most clients that poured money into forestry type schemes like Timbercorp et al, where done so by accountants masquerading as financial planners, most holding a limited licence provided by the forestry schemes themselves!! I know of plenty of accountants who moved into financial planning because they wanted to get away from billing in 6 minute increments and were attracted to % based fees and the like.
Financial planning is no different to any profession. There will be people looking to benefit themselves ahead of their clients. It happens in law, accounting, medicine and financial planning.
The AFSL model of “know your client” means that FP’s must swallow the client whole before they can give any advice. Commercially they obviously need to charge commensurate high fees such as “1% of everything you own” for addressing all areas, not just what the client wants. I cant argue with FP fees, its a lot of work the Govt imposes on you.
The FP system is back to front. It is designed to compensate for FPs who are not experienced professionals so that things don’t fall through the cracks. A Govt could only make a system this way.
If the FP industry now considers itself professional, it should be lobbying to have the nanny like connect the dots FP system changed. You need to show Govt that you can now be trusted, and then you can start dispensing targeted advice based on your professional ability and charge a commensurate fee which is what SMSF trustees in particular do want.
The accounting/ legal model of just selling the advice the client wants is what keeps them away from FPs. Such professional advice is formulated by assessing the problem, the clients understanding, and also pointing other pending issues that the professional observes, based on their experience. A Govt doctrine to force a comprehensive checklist when any advice is sought is unworkable, and belittles the reason why we seek the knowledge of professionals.
Imagine if the Govt decreed that before a Dr can see any patient, he must do a full range of blood tests and an MRI before you can give him your complaint, even if it is just a splinter in your finger. Such a system would be too costly for patients, and ignores the doctors experience to size up other potential health issues while removing your splinter.
In some cases that may be true, but it seems that the majority of SMSF trustees have their own fund because they have educated themselves over the years in financial matters by obtaining insurance, investing and contributing to super and organising their estate, which led them to be self directed and to a SMSF in the first place.
If they need help in most of those areas, then they should see an FP (this may in fact explain why FP’s only seem to see the poor and inappropriate SMSFs, which distorts their view of the sector)
Most SMSF trustees however are well versed and therefore only want to consume advice as and when they require it. FP’s will cry out “no, you cant do that’ you may leave out a bunch of stuff!”
This tit for tat discussion about accountants vs financial planners fails to consider what a SMSF trustee (the consumer) wants. The FP system devised by ASIC all those years ago assumes a common denominator of ignorance among all investors. It has to as Govt could not devise a set of rules to suit all consumers. Planners must therefore address all possible issues, regardless of how knowledgeable or self sufficient the client may be.
The FP approach to SMSF trustees is therefore forced by law to be a patronising one i.e. “Mr trustee, you are a baby playing with a gun, you don’t know what you have there or what it is capable of and could harm you and your family”.
Hardly a surprise, isn’t this why most of us set up SMSF’s?
The average SMSF punter is sick and tired of retail funds and financial planning services that charge crazy fees and provide paltry returns. This is the entire alure of setting up a SMSF, to escape from this fiasco.
This is hardly surprising. Most SMSF trustees know that most financial planners do not know that much about sophisticated tax or estate planning – nor should be expected to. Only lawyers can legally draft trust documents, wills or other legal instruments. How can someone be expected to be an expert on will drafting or partnership or trust drafting or designing them to get the best tax or asset protection outcomes if that person has no right to practise law? If you want to know about international tax law, offshore trusts, and SMSF investments or what are prohibited related party investments and get your documents drafted and checked to get you where you want to go (if that is possible) go see a tax and superannuation lawyer. If he is an honest lawyer (and most are) he will either do it or tell you it can’t be done (and he is not going to help you get yourself in trouble) or maybe it can be done, but he needs to refer you on for further advice.
WOW! Is this a surprise? I think not. Accountants operate on fee for service NOT commissions, they know their client/s and most important of all they are independent! And not too many have been disqualified.