Accountants are grossly miscalculating the cost of licensing their own SMSF advice business, with many expecting to pay around one eighth of the actual cost, research has found.
Most accountants think the one-off $1485 application fee for a limited Australian Financial Services Licence (AFSL) is the only cost they will incur, when in reality their total is likely to be more than $11,000, according to an AMP SMSF Advice survey.
From July 2016, accountants wanting to set up a self-managed superannuation fund (SMSF) will need to either purchase a limited AFSL or become a representative of another AFSL holder.
However, the implications of the changes have caused confusion among accountants, who lack knowledge about the fees and time commitment required.
More than half of the 500 surveyed accountants said they planned to charge the same amount for advice as they would for general tax preparation, the survey found.
Self-licensing will likely cost accountants between $20,000 and $34,000, the AMP research showed, compared to $15,000 to $20,000 to become an authorised representative.
Most accountants also do not realise it takes more than a year to prepare for self-licensing, with compliance, RG146 competency and pricing structure changes often overlooked.
“The question of licensing for accountants is about how, and not when - the time to act is now,”
AMP’s head of SMSF advice Stuart Abley said.
“Getting ready for licensing is a lot more involved than most accountants anticipate, with preparations estimated to take well over a year.”