Limited adviser losses create single-issued advice void

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.

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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.

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Great job ASIC & LNP, ever increasing BS Red Tape & REGS = Accountants back to illegal AFSL Advice.
Accountants have very clearly told ASIC & LNP to go & get stuffed, your Advice compliance STRANGULATION is totally uncommercial in the Real World.
So Accountants are returning to bucket loads of illegal AFSL Advice without rubbish SoAs, no BID, no FARSEA, no AFCA, no Advice PI and no ASIC Levies.
Makes sense if you are an accountant, they would be mad to stay in AFSL nightmare land.
Ms Press / ASIC, you are total disasters and have created the current problems.

I have some questions around ‘single issue’ advice.

Let’s use the case of SMSF recommendations - presumably to establish one.

How do you limit the advice without taking into account the rollovers into the fund?

Or properly analysing the costs and benefits of moving out of the ‘from’ fund?

How can that analysis occur without considering their insurance? How can you tell someone to keep/cancel their insurance without quantifying their insurance needs? And once identified, how can you - under the Code, or simply under basic decency - not recommend ways for people to meet those needs?

Once rolled over, the funds have to be invested. How do you recommend investments without a risk profile? How do you determine a risk profile without discussing their other investments?

Running a fund has fixed costs - how do you determine affordability without knowing their income and cashflow? How do you provide for liquidity in the fund without knowing their SG or contribution capability?

They’re now in the fund - how are these single issue advisers addressing the estate planning part of their clients lives? What about determining retirement adequacy?

FASEA killed single issue advice because it made all these spruikers accept responsibility for areas of their clients lives beyond the fund they could make a quick buck out of.

Sorry the professionalism bus caught up with your outdated practices, but see you later.

(I think we can also expect an uptick in ‘client requested’ SMSF establishments now too…)

Correct.... There is just no way limited SMSF establishment advice should really exist.... rollovers, insurance, estate planning, contributions, pensions, investments, centrelink all have to be considered or you're failing BID.

Either this limited advice doesnt exist, or legislation, including BID, gets completely overhauled.

haha so funny.

ASIC thinks single-issue advice is the way to go, and they want to advance that cause. licensees are saying no way only comprehensive advice will do, advisers agree.

limited licensees dropping like flies. no sight of a robo solution, good luck trying to use robo for smsf advice anyway.

numbers of holistic financial planners dwindling by the day, just wait till the end of July and see how many more have left. then also end of December.

all I can say is haha good luck and oh $800 billion in SMSFs. haha

Yep and most of it cash, direct property and Aus equities. Because property never goes down, right?

It should be clear to all that the Liberal government is spearheading this attack on financial advice. Why else would Josh Frydenberg and Jane Hume embrace all the added red-tape and cost?

SMSF limited licences do not support single issue advice. They promote single PRODUCT advice. They channel consumers into a very specific product type that is totally inappropriate for most of them. It was a big mistake to ever allow such licences, and licensees like SAN. Once the FASEA exam thins out the numbers, the government needs to get rid of these limited SMSF licences, and force upgrades to a full licence. Those who have passed FASEA shouldn't have too much trouble.

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