Accountants warming to AFSL idea

The expiration of the accountants exemption for advising on self-managed superannuation funds (SMSFs) has seen the number of accountant enquiries grow while the perceived negatives of licensed financial advice has also reduced.

Such was the opinion of InterPrac Financial Planning, whose national practice manager, Michael Gershkov, said the number of requests by accountants to join the organisation since the beginning of the year would see the dealer group reach over 200 advisers by 31 December.

The dealer group also said its relationship with the National Tax and Accountants' Association (NTAA) had increased the number of accountant enquiries.

"Many accountants that opted for a partial AFSL [Australian financial services licence] have realised the obligations weren't as onerous as first thought and in fact the full license would have been more appropriate," Gershkov said.

He added the accountant industry was seeing a major structural change irrespective of the exemption which came into effect on 1 July, due to changing client behaviour and expectations, rising costs, impact of technology, and growing pressure on revenue streams and margins.

"As accounting businesses morph into advisory businesses, wealth management and financial planning will be a key offering required by clients and in turn, needed to underpin and position these practices for sustainable long term future financial success," he said.

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What about online SOA’s? This type of platform never gets much of a mention but if you are an accountant you would be wise to do some Googling and have a look. Here is the dilemma, how much do you think it will cost to get a licenced financial adviser to complete an SOA to setup an SMSF pension? Once you have that number in your head ask yourself how much you expect to pay for the annual audit of that same SMSF? Now here is the problem if your SOA fee is higher than your audit fee ask yourself why is that so when it is obvious that an SMSF audit is a much more involved and complex process? Somewhere in all this is the reason why online SOA’s will be the answer for many accountants and why the financial planning industry is not overly keen on airing the possibilities of the platform.

Yes Robert, google do you own SOA, then google penalties for providing advice not in the client best interests. You really think auditing is more complex than setting up the actual SMSF? Borrowing to buy property, doing all the paperwork for something like that, estate planning , nominations, pensions etc, There are many variables when doing a SMSF, if you do it properly. To say the audit is more work really confuses me when E Super does it for a pension client of mine with multiple investments and pensions for $600 per annum for example. Its not just setting up the SMSF either its having the cover and compliance to do so in a compliant manner, which covers the client in the case of bad advice, unlike people doing on line SOAs for different clients that all look the same where if that goes bad and goes to court good luck. Working together we can service clients really well, trying to cut each other out for the sake of a few bucks why bother?

Thanks for response
Re: ‘Yes Robert, google do you own SOA, then google penalties for providing advice not in the client best interests. You really think auditing is more complex than setting up the actual SMSF?’
I said “Here is the dilemma, how much do you think it will cost to get a licenced financial adviser to complete an SOA to setup an SMSF pension?” no mention there about setting up an SMSF!
Re: ‘ Yes Robert, google do you own SOA, then google penalties for providing advice not in the client best interests.’
I am talking about online SOA provided by licenced financial advisors – put ASAP Accountants Scaled Advice into your search engine, think of them as the future E Super (Read E SOA) type providers that will start to emerge to handle the post 1 July 2016 environment.
Remember a lot of clients want scaled advice, when they set up and SMSF or change their pension they do not want a financial planner to analyse and troll trough all their details and give them unwanted advice on wills, estate plans, insurances, investments, tax, budgeting and on it goes. The analogy might be when an accountant sets up a Pty Ltd for a client – I do not see why it follows that because I am doing that I need to do an audit of the client’s taxation affairs, delve into the inner workings of various tax structures and produce a detailed tax report about all the possible options. Would doing that be best practice, sure it would, but the client does not want it; is happy to tell you so and is also happy to sign off of the fact that they want scaled advice – in short they want a Pty Ltd setup not intensive seminar and written report on all the ins and outs. Such a report by definition would have to include Corp law issues, Social security law implications, tax law analysis, estate issues, Duty Act issues and so on – who is going to read it!
My key point is what more than a few SMSF clients out their need is scaled, robo type SOA’s. Remember 80% of Australians do not use, which I assume means they do not want the services of a financial planner. 80%,is a lot of people and it seems likely to me that many of them are doing just fine without the guiding hand of a financial advisor.

I think you're right Robert - there will be online availability. Its pretty much the case in any market - there are different models for different client tastes/preferences. The trick is deciding what you want to be, and finding the clients that like that. There is space for all providers, but no doubt some will do better. The changing demographic will fall more to the online operators I think, the tech savvy, but it depends on your current clients base, age, and how much longer in your own career you have to go.

Under Best Interests Duty you cannot scope out advice areas that are actually relevant to the advice you are giving... You really should be declining to provide advice if you are not going to address those relevant areas. I seem to remember too, ASIC having issues with "cookie cutter" SOA's... I wish we could simplify all these usless SOA's , compliance etc, but ASIC dont care. It just adds more cost to provide advice.

Well Robert I agree Clients don't want to read all that stuff etc, but unfortunately if only the law was so simple. And yes you could do it in a scaled advice situation however despite you thinking that wills, estate planning and insurance dont matter, I would agrue that introducing a SMSF into a clienst situation does affect the very things you want to discount, under best interest it would be a game practioner that choose to ignore those factors. You would need to have very good file notes and be absolutley sure the client knew the implications of excluding such factors from their advice, of course they do you say...until things go wrong!

Correct... There is actually a requirement for a SMSF to show they considered insurance as well... Scope it out at your peril.

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