As one of the fastest-growing areas in financial services history, it would be hard to dispute the future growth of the SMSF sector. However, that growth brings challenges for professionals and trustees, and education is at the heart of ensuring the sector remains compliant and effective.
There is an increasing demand for qualified and experienced professionals to service the ageing population. There is a general disengagement with super among Australians, and the Institute of Public Accountants (IPA) firmly believes the basics of super need to be understood and demystified. This will ensure the SMSF sector grows hand in hand with the financial literacy of investors.
It seems like a challenge, but it’s an opportunity for industry professionals to roll up their sleeves to help build the capacity and knowledge of their clients. The first step in this process is to ensure, as a professional, you are appropriately licensed and resourced.
The IPA encourages its members to consider expanding their services – a public accountant doing purely compliance-based work and income tax returns may find their business drying up. Increasingly, clients want to discuss their wealth beyond the basics, and professionals should equip themselves with the tools to provide these services.
We are encouraging any member considering going into this space to contemplate taking out a full Australian financial services licence (AFSL) if they are serious about increasing and diversifying their service offering.
This is not just about responding to legislative reform, it’s about responding to client demands for more holistic, strategic and value-adding advice from their trusted professionals; it is also about responding to the challenges and opportunities in our constantly changing environment.
Regardless of licensing preferences, accountants in practice servicing their clients in the SMSF space should consider reviewing their business model and assess how the announcement of the new licensing regime is likely to impact them, their business and their clients.
Also, given the time it will take most businesses to make a licence transition if they so choose, it is important that they act sooner rather than later.
Another consideration moving forward is international competition. China is posing fierce competition for our young people in particular, reportedly producing more than 20 million university graduates every year - all competing for employment.
The Chinese government is hungry for information in relation to what Australia has done in growing individuals’ involvement in planning for their own futures. It’s fair to say that it is rapidly moving towards this notion of a more mobile financial services sector, and represents one of Australia’s fastest-growing partners and competitors.
Looking ahead, the industry is facing both opportunities and challenges. With a focus on education and diversification, Australia’s super sector will remain a well-functioning, and a world-class retirement income vehicle.
Andrew Conway, IPA chief executive officer