The number of self-managed superannuation funds could reduce dramatically over the next couple of years as the scrapping of the accountant's exemption will inflate costs for members.
Such was the prediction of JJW Consulting industry consultant, John Wiseman, who said the new stipulation for accountants to provide statements of advice for SMSF advice similar to financial planners would increase costs.
"There are a lot of people closing self-managed super funds down because it's going to become too expensive and they'll go into a retail fund or an industry fund or a SAF [small Australian Prudential Regulation Authority (APRA) fund]," Wiseman said, adding this could happen over the next 12 to 18 months.
"In the next six months when a lot of these self-managed super funds, when the people have been to see their accountant or whoever they see, the financial adviser, the adviser will not be able to say anything without doing a statement of advice, whether it is on insurance, whether it is on legal matters related to the trustee."
Wiseman had also observed that the new licensing requirements for accountants to advise on SMSFs had filled them with trepidation to the point where they were refusing to be seen to be giving advice to clients.
"They're so nervous that they don't want to be seen to give any advice. They just say ‘go and see a financial adviser. We won't touch it'," Wiseman said, adding that while this may eat into business for some, the regulatory and compliance burdens outweighed this.
"My suggestion in one of my articles is financial advisers shouldn't go on holidays in the next six months because I think they're going to be very busy. And if they're not they're not keeping on top of what's going on out there."