Accounting firms driven to drop planners

The recent weeks have shown that numbers of advisers dropping from the Australian Securities and Investments Commission (ASIC) Financial Advisers Register (FAR) have been driven by the accounting firms which offer limited advice support services and for which the financial advice is only a small part of their day-to-day work.

Given the Financial Adviser Standards and Ethics Authority’s (FASEA) requirements and the high costs were often the key reasons behind such a decision, the majority of the accounting firms who chose to take their planners off the register said it did not mean any intended cuts to their headcounts.

According to HFS Consulting’s director, Colin Williams, an interesting figure to watch would be the number of small accounting-based licensees which would remain in business post-FASEA exams.

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“FASEA requirements are simply too onerous and costly for the return they get on the very limited advice they provide, so they are opting to give it away. My understanding is that they mostly operate on a restricted SMSF [self-managed super funds] licence or operate on a restricted basis under a licence” he said.

Money Management asked for a comment from Seamus Fennelly, director and compliance manager at SMSF Advisers Network, one of the biggest groups whose number of adviser roles fell by almost 50 only last week, and who confirmed that the main reason for the departure cited by his authorised representatives was the ASIC’s industry funding levy.

“Our advisers, who provide a limited scope advice (after the removal of the accountants’ exemption on 1 July 2016), are charged the same amount as financial advisers who run a financial planning practice so it did not make economic sense for them to continue to be authorised,” Fennelly stressed.

“The forecasted levy for FY 2019/20, which ASIC released in late June 2020, was $1,571, but ASIC’s invoice (issued retrospective) was for the amount of $2,426 per authorised representative. The concerns raised during our discussions about the levy was how much it will be for FY 2020/2021 given the increase to the allocated budget and the reduction in adviser numbers across the industry.”

According to the data from HFS Consulting, the number of accounting groups with limited advice advisers did not take off until 2016 and there was a rush of appointments in the years between 2016 and 2018 as accountants took advantage of the ability to provide limited advice to SMSF clients only via limited licensees from 2016.

Currently, they make up around 1,800 of advisers, the data suggested.

Further to that, the HFS’ data on the known passes of the FASEA’s exams among the advisers at accounting – limited advice peer group proved that they were way behind the broader industry.

Williams said that the number of passes for the accounting – limited advice (operating with limited services mostly for SMSF clients) was also very low compared to the main peer groups but, at the same time, other accounting based firms – peer group ‘accounting – financial planning’ who operated under a more holistic advice licensee, had a much higher pass rate than other limited advice accountants. Their rates however were still below the traditional financial planning sector.

“The numbers provide opportunities for existing holistic advisers who intend to stay the course. It is unlikely that any of the advisers in the accounting – limited advice peer group will lose their job, they will simply focus on accounting as for most of them, this is the largest part of their current job role,” Williams said.

“However, there will be a need to service SMSF clients and that is where qualified advisers will gain additional opportunities. The losses at a licensee level will cause some pressure, with a significant downturn in the number of advisers and at the self-licensed level, many of these licensees will simply be wound up. Life for most will return to what it was pre-2016.”



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Exactly as union super and Labor have been wanting since the GFC was pinned on us as 'our fault'.

Possibly a dangerous decision for accountants to make. It would not take genius to send out a few surveys to SMSF trustees and ask questions like "Who do you use for investment advice?" "Who has helped you put together your investment strategy?" I would suggest ASIC will wait about 18 months to let the number fall, and do this.....

ASIC never have and never will bust Accountants for zero AFSL compliance Advice.

RobinBris, unfortunately, ASIC has proven time and again that it is completely bereft of genius! ASIC will be so snowed under with the new breach reporting obligations (ie investigating complaints of an adviser who sent out an FDS a week late) that they will continue to ignore the much greater challenge of identifying unlicensed providers. ASIC appear so good at shooting fish in the barrel that they have no desire (or need) to go looking outside for more challenging targets.

Given that ASIC is primarily focused on persecuting licensed advisers, there is little danger to accountants from relinquishing their limited licences and reverting to unlicensed advice.

Since limited licenses were introduced there have been far more ASIC actions against holders of those licenses, than against accountants who continued giving SMSF advice without a licence.

Australian consumers need a new regulator to protect them from dodgy unlicensed financial advice. It is a large and growing area, and ASIC seems unwilling to do anything about it.

Great job ASIC and FARSEA, now Accountants are well and truly over the BS Advice costs, Regs and Red Tape they will go back to bucket loads of illegal AFSL Advice with zero AFSL compliance.
And ASIC will go back to stopping none of it.
Not once has ASIC ever busted an Accountant for illegal AFSL Advice with zero AFSL compliance, never.
Accountants would be mad to stay with an AFSL and crazy costs, Regs, CPD, FARSEA, etc when ASIC will let them give Advice anyhow with zero AFSL compliance.

Exactly right. ASIC do not care about illegal SMSF advice, they do not care about conflicted industry fund advisers who fund themselves from unsuspecting customers who haven't given consent nor receive service, they don't care about dodgy crypto floggers, they don't care about book floggers, so-called 'money coaches' or the media who regularly overstep the mark into personal advice, and they don't care about the life insurance cartel. They are only interested, in fact obsessed, with one thing - the unfair persecution and destruction of licensed financial planners. It is totally bizarre. The losers in all of this, are consumers. Australia is now the financial equivalent of Gotham City.

Yet another example of Government driving business out of business, with a negative consumer outcome. ASIC say their hands are tied, so it really is up to the Minister to address this funding issue.

Nothing to say about criminal behaviour of financial advisors? There's been a few appearing in about every edition of this publication. You must have overlooked the advisors driving themselves out of business and into goal. Surely a positive outcome for consumers for whom you care so much.

You suggest ASIC should not be burdened in looking after the interests of consumers in chasing down dodgy advisors, accountants, insurance agents and the like. In actual fact ASIC is doing house cleaning and this is wanted to support the honest financial advisors and their good work. This means that good professional financial advisors are fully supportive of ASIC's policing. If you don't understand this then you must favour the dodgy lot.

Oh Hedware, you really are a Hedcase.
ASIC have such a focus on killing Real Advisers for minor breaches and strangling them in ever increasing BS regs and Red Tape.
No amount of REGS and Red Tape will stop the odd dodgy / criminal Advisers. Every industry has a few crims.
No Advisers wants these crims in the industry but ASIC only ever come after the fact.
The point here Hedcase, is ASIC have NEVER once busted an Accountant for illegal, zero AFSL compliance Advice, never.
And as for your Industry Fund buddies. Why should EVERY MEMBER pay Advice Fees, when most members dont get Advice??
Is that not Theft of members money ?
Are those Advice fees / Hidden commissions signed off by these members ? NO they are not.
Every Real Adviser I speak too has more than had a gut full of ASIC's persecution.

The biggest problem with the current compliance regime is that the requirements are so ridiculous, contradictory, and duplicated that the entire system is weighed down in nonsense that provides no benefit to consumers, it is actually harmful to consumers. The likes of ASIC are so busy smashing the crap out of licenced financial planners, yet we see the likes of Melissa Caddick out there causing real harm completely under the radar. Whilst I can be jailed for 5 years for poor record keeping, how many other Ponzi schemes are there out there that are not being looked at? I guarantee you that there will unfortunately many Ponzi schemes out there and I doubt any of them would be being run by licenced financial advisors.

It is a flawed process to believe that more compliance automatically leads to better customer outcomes, with licenced advisors leaving by the thousands there is going to be an explosion of unlicenced advice with no customer protection whatsoever. The only chance licenced planners like myself have to succeed is to dump all my lower fee clients (clients who need help the most) and increase my fees significantly just to put food on the table.

The focus of ASIC should be those dodgy operators that are causing real harm. Whilst you mention the criminal behaviour of advisors (yes these people need to be dealt with harshly), it is wrong to suggest that this is a bigger problem in financial planning than in other occupations, the actual numbers do not support the notion.

There is the problem... You've got the Melissa Caddick's of the world out their defrauding people and they end up getting labelled as 'financial advisers' despite not being licensed or registered (as they aren't one). Naturally more people are scared of seeing a real adviser as a result.

Meanwhile, if someone starts fraudulently selling fake prescription drugs, I can assure you that they wont be referred to as a 'Doctor'. They'll just be called the con artist they are.

this is a major issue for financial planners as the perception is left for others to manage, and so the water cooler talk is that financial planners are scammers.

if you go and talk to an accountant every single one rolls their eyes, when I tell them I am a fully licensed adviser they say, yeah but you are not like them you are an accountant (which I am)

hard to make inroads when the public perception is so bad and continues on

I have no doubt the wink, wink nudge, nudge method of recommending the commencement of a smsf will continue unabated and uninvestigated by that corrupt and incompetent mob, ASIC.

Of course, I mean the clients absolutely self-directed the set up of the SMSF, corp trustee, bare trust and purchase of a property where the Accountant so happens to get paid a fat commission all on their own with absolutely no advice or persuasion!

Rin$e and Repeat. No 'Advice', no worries hey ASIC!

we need to strangle accountants, mortgage brokers, and lawyers so they get a taste of the adviser's regulations.


just assume everyone is a financial adviser and prosecute. simples.

Accountants are regarded as one of the most trusted professions by clients but they have one of the highest fail rates of the FASEA Exam. Either accountants should not be providing Financial Advice or the exam misses the mark. What am I missing?

They think what we do is easy and don't prepare or study. This has been going on since they introduced the DFP 20+ years ago - they think they can breeze through as they are of superior intelligence.

accountants and the accounting profession consider financial planning a subset of the accounting profession. why wouldn't they? they have dominated financial decision-making for over millennia. that's right way back 1,000 years to Luca Pacioli who invented double-entry book-keeping.

what is ironic however is that no accountant would question the additional requirements to be a registered company auditor, forensic accountant, business valuation expert, SMSF auditor. most accountants would easily agree that these other accounting roles require additional experience and experience.

but they think that financial planning doesn't require any skills. this is more about jurisdictional control, that is, exercising their historical right over a certain domain than not understanding that financial planning requires additional qualifications and experience (see, Abbott, Andrew The system of professions). they know that. they just ignore it.

but the way professions work is that they claim jurisdiction over a specialized area, and they exclude all others as paraprofessionals so they can claim that right over the domain to practice (Abbott, A)

it's interesting to note that the accounting profession in Australia has done that within its own fraternity. for a very long time members of the IPA who did not require a degree to be admitted (going back about 20 years now) were often excluded by the ICAA (the precedent of CA ANZ) and CPAA as being inferior to them. they are all best friends now, and in fact, the IPA offers the highest award of the three.

that's how professions work. we need to take a leaf out of the accountant's playbook so we can also exclude all others, there are really two elements we need to achieve.

a. legal recognition - achieved

b. public opinion - not yet

probably also explains why not a single planner sits on the TPB, despite advisers making up over a 1/3 of members.

the number of advisers on the FAR is already below 20,000. the number of accountants on the FAR is probably around 5,000.

that number should drop significantly by the end of 2021, and early 2022. my expectations are that by the end of 2022 we should be around 15,000 then a steady drop of 100 per week to 2026 leaving about 5,000 practitioners.

consumers will have a choice of google or ISF, or digital, Robo advice. what a disaster.

Having worked in Accounting firms, Accountants can do and say whatever they like. Why would you even be bothered being licensed. Of course step outside what an "average" person is expected to pay and you might get phone call from the ATO. Poor advice in Accounting is met with "you paid too much tax" Poor advice in planning is "you lost money"

this is disingenuous, to say the least. one of the privileges of being a professional is that you get leeway. how long have accountants been signing off on audit reports of public interest entities? how long have they been witnessing statutory declarations?

the three major accounting bodies (CA ANZ/CPA/IPA) all require a minimum of :

a. postgraduate qualification to be admitted to membership
b. 3 years practical experience mentored by an accountant

c. 40 hours of CPD or 120 hours over a triennium with a minimum of 10-20 hours over any one year
d. have mandatory ethical obligations for professionals in public practice or commerce as all three fund an independent ethical body called the APESB who issue ethical standards

they have earned their right in society and therefore deserve freedom. you cannot use the financial planner's standards to judge accountants most accountants are not interested in giving financial product advice. they are interested in strategic advice to discuss matters of interest to their clients many of whom own businesses and SMSF's which often house BRP.

so it is unrealistic and unfortunate that the law prohibits some of the best-qualified finance professionals from giving clients advice. these types of clients have complex requirements and cannot be easily met by Robo advice.

with the huge exodus of mature advisers from the profession it leaves a huge advice gap. this isn't good for anyone, not financial planners or accountants or for consumers.

this is what we should be focused on addressing. how do we keep accountants engaged to provide advice?

the ALRC is already reviewing chapter 7 of the Corps act and many suggest it needs to be completely revised, removed rewritten.

ASIC has received over 500 submissions about the affordability of advice and I believe they are speaking with Treasury and the government to come up with a workable solution.

it takes time for these things to happen. we just have to be patient, it is definitely wearing thin on me but what choice do I have.

AND, NO accountants do not just say anything, on the whole, the profession does very well, and accountants by their very nature are conservative, it's our training that does that.

Apologies, you are correct and I should have used the words "earned the right" but they do and can say anything. I"m not Accounting bashing here, I love Accountants, I'm just attempting to contrast operating environments. No regulatory body will ever step into an Accounting business. (I don't call clients paying the benchmark rate of tax an oversight) and many Accountants say "anything" either unknowingly or knowingly. I am just jealous of that system of course, (sell a SMSF better than McDonalds can upsell you fries, recommend shares for clients in a SMSF & the ability to establish a SMSF, purchase a business real property from themselves using members super with no paperwork/consumer protection) and with the Finance Minister given the green light to tik tok video's all of this says a hell of a lot more about sadly about financial advisers. Jump on Tik Tok and you'll see many young Australians on social media pushing finance tips with links to Accounting firms.

time for you to be an accountant. a lot less hassle, cheap PI, much lower risk. respected by your professional body, respected by the public.

why anyone would want to be a financial planner today is beyond me. totally absurd. thankless occupation. and a scapegoat for all.

no wonder advisers are voting with their feet and leaving in droves. somebody send a letter to adele Ferguson about a new target. maybe lawyers (she dare not try)

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