Speaking at a panel in the SMSF Association National Conference 2021, SMSF Association CEO John Maroney said that the future for SMSFs should see accountants playing a greater role; however, the current regulatory nature of advice has created a roadblock.
“We strongly believe there’s going to be ongoing roles for accountants right across the SMSF sector, particularly for the clients now and into the future,” he said.
Mr Maroney noted that he’s observed a number of incidences whereby some accounting firms have either built in a financial planning division or expanded their network for SMSFs.
“We certainly are strongly encouraging that connection for accountants, making sure they are having good networks with financial advisers, with lawyers and auditors so that they can, with the assistance of technology, deliver efficiently for the future of advice for SMSFs,” Mr Maroney said in response to this trend.
“There’s a much broader role of guidance that accountants can do for the whole business arrangements of which the SMSF can form a subset, and that’s where we’d like to see, to some great effect, flexibility in the regulation and not prevent accountants from having sensible discussions on guiding the strategic direction of their clients.”
Mr Maroney noted there may be some financial product advice somewhere down the track, but at the moment, there are too many unnecessary restrictions, adding that the limited licensing framework has not worked and needs to be replaced.
“The issue the whole sector is facing is there is so much cost of compliance built in delivering advice, most of which is not valued by the client, it’s them effectively as a risk mitigation for the licensee,” he said.
“It’s got to be consumer-centric, but we want to see an enhanced role for accountants working with either related or independent sort of financial planners so you’re getting the best result for their clients.
“If we’re going to engage the 80 per cent of the community that are probably priced out of getting regular ongoing advice or even one-off advice, we need to have a different system.”
Michael Rice AO, executive director at Rice Warner, said that in his view, the “Financial System Reform Act is 20 years old and it’s time to rewrite it completely”.
“We’ve now got people offering strategic advice on budgeting savings and debt reduction who are money coaches [and] are not licensed, but the fact is that strategic advice is quite valuable,” Mr Rice said.
“So, we’ve got arbitrage, we could argue that an SMSF is actually an easier vehicle to give advice on because people are trustees self-directed by definition, so it’s much easier to talk to them because you’re not giving financial product advice, the products are already there.
“You’re not comparing with anything else, you’re actually talking about strategy, and that’s more valuable for most people especially SMSFs.”
Mr Rice said from all the changing regulatory notions, “we may have lost the plot a bit as a result”.
“It’s not the fault of advisers, it’s the fact legislation has not kept up with technology and changes in thinking,” he said.
“ASIC has released a paper RG 332 whether which they’re consulting on now, but I really think the government should change the laws.”
This latest commentary comes as calls continue from the industry relating to law changes that can better facilitate advice delivery that better reflect the needs of clients rather than the regulation of financial product distribution.
ASIC has also recently flagged the next steps it will take to address the growing barriers for SMSF advisers.
The amount of accountant driven SMSF set ups that wiped out insurance coverages and left SMSF’s in cash was the reason accountants were pulled out of the system before.
So that’s the way to go, then? Back to that stupidity?
Accountants are not experts in investments or pension incomes. Hence they are part of the problem.
Well ANZCA & CPA’s You represent your members interests! Really ! this is why ASIC regulate members & not Accounting Bodies! Old stuff but this is why members cancel their membership!
Dear SMSFA, as a Financial Adviser member since 2005 it would seem you are very pro Accountants and getting them BS Regs relief.
What’s good for accountants must apply to Advisers too.
It’s the whole lot that needs to be reduced not just for accountants.
There are more accountants in jail than financial planners in jail.
Proof please ?
Just change the words “is intended to influence a person” in CORPORATIONS ACT 2001 – SECT 766B(1)(a).
Change this to “directs a person”.
This will ensure all the BS regs only apply to people selling product. Not on all the good work various other professionals need to do to help educate their clients and to help them understand their options.
The legislation was written when “financial planner” = commission driven insurance salesman.
You can not set up a SMSF without considering an existing super fund and that consideration is financial advice and therefore should be regulated as such. Anyone who doesn’t understand this probably thinks Bill Gates developed COVID.
Rice Warner have obviously been paid a lot of money by the FSC to support super funds and banks to give general advice on everything so they are hardly an unbiased source
If accountants could see past their own navels and actually (competently) facilitate the investment side of SMSF they would not be bleating about being regulated. In a similar vein to safety laws being written in blood, the rules are there for a reason.
In running a SMSF – there is;
– Investment advice – advising members/trust4ees on what to invest in. Some need help and use a financial planner, other do not and do it themselves.
– Strategic advice – options available to help improve the running, operations, tax, etc of the SMSF – which has nothing to do with investments – but should include contribution types and caps and rules, and pensions, when can I start, how much do I need to take out, reversions and if no reversions what, and BDBN
– then there is all of the educative advice given which may or may not cover the above to two items, and then
– you have all of the this deemed product stuff that has been incorporated as if it is a product, which is causing all of the problems.
IF this last category was removed and the product advice related only to investing in shares, managed funds, property etc, then the advice able to be given to SMSF trustees and members would be more streamlined, reasonable and solve most of the issues.
The strange thing is if a client approaches me, and they want to set up a SMSF, I have to ask if they have another superfund, get the details and do a comparison. HOWEVER the reverse does not apply. IF the client approaches an industry or public offer fund, they get set up immeadiately, and no one ever asks them if they have another superfund, and the fund about to be set up never has to give them any advice about there fund or their other fund. The proof of this is to look at how many people have multiple superfunds.
So if a client approaches me to set up a SMSF I should then be able to set it up without the need to give advice on all their other funds.
But are you going to rollover the other funds to the SMSF ?
Pretty hard to cherry pick parts.
It’s all Advice. And under Corps Act it’s All Product Advice.
They just need to completely reduce all advice BS REgs and let’s us do our job.
And pigs might fly as they do all day every day in Canberra