ASIC levy final straw for accountants providing advice

A combination of factors, such as the Australian Securities and Investments Commission (ASIC) levy on top of licensing and Financial Adviser Standards and Ethics Authority (FASEA) requirements, are driving away a growing number of accountants with limited authority from providing financial advice. 

Last week Money Management reported that the accounting firms with limited advice support services and for which the financial advice was only a small part of their day-to-day work were driving the drops in overall adviser numbers observed by ASIC’s Financial Adviser Register (FAR). 

Grahame Evans, the chief executive at Easton Investments, told Money Management that for many accountants the impact of ASIC’s levy was a final straw, given it came on top of the cost of taking the FASEA exam, the licensing cost, the cost of extra study, and the cost of doing continuing professional development (CPD). 

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Easton Investments, according to FAR data lost 10 adviser roles last week and lost over 60 adviser roles since the start of year. 

“For many of them within the limited authority space ASIC’s levy has been really a nail in a coffin. The other aspect is the CPD and the [FASEA] exam and it’s all becoming too much for them, with very little returns, so many [the accountants] just decided to stop providing the advice in relation to self-managed super funds [SMSFs],” he said. 

“These are not the people who have left the accounting practices, these are the people who have made a conscious decision to hand back their authorisations and not have one going forward.” 

Evans stressed that this number, those who would decide to opt out from the industry, would be even higher after 31 December, 2021, as accountants in the limited authorisation space would be joined by many experienced advisers who would, most likely, stop providing advice come 1 January, 2022. 

“The whole process is going to lose quite a number of experienced advisers and because of what is going on we are going to see less advisers that we have seen before because people are opting of doing what is required to be a financial adviser,” he said. 

Evans also noted that since even the provision of general advice required to be authorised in some capacity, he expected many of the accountants, for whom the financial advice was always only a small part of their business, to move back to just providing tax advice which they were allowed to do under the Corporations Act. 

“I think it becomes difficult because the clients will be asking their accountants about some aspects in relation to self-managed super funds. And now they either have to tell the client they can’t give advice in this area, other than tax advice, or they will have to refer them on,” he said. 

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Or more likely Accountants just go back to giving bucket loads of illegal AFSL advice with zero AFSL compliance.
Not 1 single Accountant has ever been busted by ASIC for AFSL Advice with zero AFSL compliance.
So if ASIC allows Accountants to give illegal AFSL Advice, they would be freaking mad to be licensed. Very costly, overly regulated BS Advice with AFCA threats too.
Or illegal Accounting Advice, no licensing costs, no PI, no AFCA, no AFSL costly compliance, no fact finds, no SoAs, no FARSEA and No problems from ASIC.
It’s a No Brainer from Accountants really.
Great job ASIC and FARSEA, total fail yet again.

If it is not documented - it did not happen. This seems to be the rule for Financial Advise compliance so unlicensed advice with no documentation would make perfect sense - and a lot cheaper. Yes, well done ASIC.

Have to agree here, the number of accountants I see making very casual superannuation recommendations is staggering... and they see nothing wrong. Watched an accountant just last week tell a 20-something year old to use his catch up concessionals to make a $50k super contribution to reduce his tax. Tax reductions are great but I highly doubt they stopped to consider what the implications are of locking up $50k of capital for 30+ years are.
I'd love to see a crack down on this - forget licenced advisers (most of whom at least have some experience and qualifications - regardless of what stage they are at) and start cracking down on people without a shred of a clue.

I see plenty of accountants give very clear recommendations, they don't even try to disguise it. I saw a client whose accountant told him to invest significant amounts of money in specific products. The accountant simply goggled what funds were giving the highest returns and told the client to invest. Pretty easy when you know how corrupt, incompetent and bias ASIC are.

Lol... just today I had an accountant phone me and ask how many years can a client go back to make Superannuation catch-up contributions. It could have been general "information" except he told me the fellow was under 65 and hadn't contributed to Super for a certain period of time, but I had to check that his balance was less than $500k for myself. :P

No doubt looking into accountants giving unlicensed advice is another one of those things that isn't part of Danielle Press' job description.

Yep its above her pay grade.

If you think that this will drive accountsnats to refer SMSF clients for investment advice to advisers.. my message to other advisers is.. You risk going broke waiting.
Accountants are logically fearful of advisers recommending clients close their SMSF because of "best intrest duty" and then they (the accounatnts) will lose their income feed from maintaining the tax advice and returns for their clients SMSF's.
The reality is the accountant will tell the clients to do their own investment research and management (friends, tik tok, cyypto, property spruiklers etc..) as this is the foundation of Self Managed Superannuation.

Oh, and I'm sure all of these diligent accountants reluctantly handing in their licenses have gone out and scoured the market to find a professional financial adviser to refer their clients to in their time of need.

What's that? Their clients needs happened to stop existing at the same time as they handed in their license? Wow, what a coincidence.

It's almost as though their desire to only recommend SMSFs (the only financial product they can administer/charge on, - another coincidence) is what drove their decision to moonlight as 'financial advisers', rather than a deep, abiding desire to ensure their clients whole financial picture was being addressed.

“I think it becomes difficult because the clients will be asking their accountants about some aspects in relation to self-managed super funds. And now they either have to tell the client they can’t give advice in this area, other than tax advice, or they will have to refer them on" Well, yeah. That's what professionals do. For crying out loud.

(To pre-empt the usual response to any criticism of accountants - it doesn't matter if you're the 'most trusted' adviser for a client and you thus believe you're the only person that should be providing them financial advice. Trust does not automatically mean qualified. And by thinking only you can do it all, you're probably doing your clients a disservice.)

I am beyond the who did this and that and tattletales. the fact is that the current regulations are unworkable. this is not new, this is something that the industry and the accounting bodies have been saying for a while now.

I am more concerned about the viability of the industry as a whole, and increasingly it is apparent to me and many others that it is not viable anymore.

accountants exiting the advice space has substantial implications and will lead to the industry imploding. there are perhaps 5,000 limited license holders if they exit the cost of the ASIC levy will be borne by the remaining advisers and will double again. many small advice practices, whether they be recent entrants and or adjunct to other businesses such as a mortgage broking business or a small accounting practice will also exit the space.

FASEA has widely exaggerated the "10,000" strong numbers of advisers remaining. many stakeholders will find out that by the end of the year it will be in actual fact no more than 10,000 with still a big 2022 drop-off and a big 2026 drop-off to come with the vast majority in supporting and non-client facing roles. you add that to the no immigration and single-digit supply into the industry.

the number of accountants leaving will not only impact the remaining adviser's many dealer groups will also have to fold. for many of them, the only income is adviser fees.

there will be no more than 5,000 in total remaining 3,000 IFA's who serve HNW and are self-licensed and 2,000 across IOOF and AMP. IOOF who is the largest licensee is already rationalizing.

there you go, the consumer group's overzealousness has resulted in an unworkable operating environment for everyone else.

no ethical adviser will ever say that consumers should not have protection, in fact, we argue for it, but regulations have to be sensible and balanced and meet the needs of the advisers as well, it needs to be a fair bargain. it cannot be a situation where consumers and all others get all the benefits and the adviser has little left for themselves.

and advisers are voting with their feet. what's the solution on 1 Jan 2022 when there are 10,000 or fewer advisers remaining, we already know many who have passed fasea are looking to exit and are in supporting roles.

why do I keep saying this ? because the same thing happened in the UK, which left 5,000 advisers so risk-averse that they were unwilling to provide advice. the government in the UK has had to unwind all of it including risk commissions.

don't trust me just read up on it. you will find out all of it is true. what a truly diabolical disaster. some heads must roll I fear though they will try and find an adviser or two to blame. but not this time.

the oracle strikes. again. it's hard being right all the time. I am happy to entertain and educate I hope you all enjoy it.

This will just serve to increase the Liberal government's great big new tax . Expect the #ASIClevy to increase again.

Just received the below from a Chartered Accountant. I'd be dead meat if I spent 20 hours on an SOA and wrote the below.

"As per the document you attached, the contributions are non-concessional. The ATO only pays the co-contribution on the concessional contributionsc (after tax contributions).

Therefore there will be no co-contribution received by xxx"

let's give them a break mate. they only have a graduate diploma.

But accountants also have an infinite more credibility in the market place than financial planners. Their clients are use to paying their invoices from their own bank accounts and they see their small business clients regularly. The vast majority accountants have at least an undergraduate degree, many financial planner have only a Diploma or a post-graduate after a non aligned undergraduate degree. Financial planners general poor advice and dubious processes (see Sam Henderson an industry media identity) was highlighted at a Royal Commission. Now if I was a consumer who would I make an appointment with?

Typical arrogant accountant. Ignore the facts, make baseless claims and then just give unlicensed advice because "I have a degree". Our business deals daily with accountants with less qualifications than us, who continually giving unlicensed poor advice to clients, clearly breaching numerous laws. For every Sam Henderson their is an accountant who has done exactly the same or worse, just yesterday a number of accountants were charged with fraud around job keeper, one even impersonating clients. Get it clear accountants are no better than financial planners. Our clients happily pay our fees, even from their own bank accounts. So do you have any other words of wisdom?

Hehe, what rubbish. Accountants are merely reporting vassals for the ATO. They don't meet with their small business clients regularly, and many no longer charge by the hour but instead by "the value we add" - this of course just means as much as they can get away with.
Many an accountant has been done for claiming client tax refunds.

parts of what you have said are correct. most accountants unless they are really old dinosaurs and have been grandfathered do have a degree. all three major associations CAANZ/CPA/IPA require the completion of a degree to obtain membership. that is correct.

but the credibility you speak of, which is in perception only is pure fiction. as you rightly pointed out, the difference between financial planners and accountants is that one has been a profession for a long time with a history dating back nearly 1,000 years, and the other is an emerging profession with a history going back maybe 20 years.

accountants get to manage the image of their profession so as not to bring disrepute to the whole profession so it does not disintegrate like financial planning.

financial planners are the butt of all jokes and subject to regular defamation by the media and regulator and all and sundry, we haven't got anyone to stand up for us, and as a cohort, we haven't done well enough, so the blame lies with us as a whole. that's really the difference.

you guys and gals get to manage your issues privately, we have our dirty laundry aired in public day after day. if this happened to any other profession they would be similarly discredited. there is a rogue financial planner in the newspaper and tv every day (even if they are not a financial planner the media just categorizes them as one) so we hardly have a chance. even if they were a registered planner long in the past, they still get called a financial planner. whereas if a former accountant were caught doing something illegal they would just be a criminal, not a former accountant, former lawyer, or former doctor. the media would say something like previously qualified as a doctor. I have seen this bias repeated hundreds of times.

so dear friend and colleague, it's just a matter of time before we get to do the same. remember by 2026, the vast majority of planners will be gone, the only ones who remain will have either a BCom fin plan, gd dip fin plan, or a higher award.

so sling your mud, cast your aspersions and be the first to throw the stone because you have only a few years remaining.

oh dear !!

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