Regulatory inflexibility for limited licence holders is to blame for the drop of self-managed superannuation fund (SMSF) accountant and adviser roles, according to the SMSF Association.
Last week, the SMSF Adviser Network lost 91 roles, as licence holders had to make a decision for the new financial year over whether they would stay in the industry.
Overall, limited-advice roles that focused on SMSF advice had contributed to 23% of the loss of adviser roles over the financial year.
Peter Burgess, SMSF Association deputy chief executive and director of policy and education, said compliance costs had made it unrealistic to maintain a licence.
“What the figures are showing is that there is a reduction in the number of advisers, particularly those who hold a limited licence, and many of those are authorised to provide SMSF advice under that limited licence,” Burgess said.
“There is various reasons for it, but I think the main reason is the cost – the compliance cost of continuing to provide advice has been increasing so it’s becoming increasingly difficult for advisers to be able to provide to clients in a cost-effective way.
“In our view, it is a problem losing advisers as it means it’s going to be even harder for individuals to obtain the advice they need, particularly around SMSFs.”
Burgess said education requirements and being required to produce statements of advice (SoAs) were some of the costly factors that made in impractical for licence holders that focused on a limited scope.
“It’s a concern to us that we are seeing a reduction in the number of limited licence holders and it’s primarily due to the cost of providing advice for some of these advisers, it’s not the main part of their business,” Burgess said.
“Having to comply with all the different compliance obligations is not something that’s cost effective for them to do.
“The [Financial Standards and Ethics Authority] FASEA exam itself covers a whole range of topics, many of those topics are not areas that limited licence holders necessarily focus on, so they have to invest quite a bit of time in having to up-skill for the exam which is a problem.
“They have to produce a statement of advice and that can be quite a time consuming and costly exercise for advisors to produce.
“That’s what is driving the costs here, the inability to provide single-issue advice or tailored advice around a specific issue that the client is seeking advice on.”
Burgess said they had made a submission to the Australian Securities and Investments Commission (ASIC) as part of the consultation on making advice more accessible.