Addept director Sarah Robinson has escalated her SMSF involvement since her introduction to the sector 22 years ago. She shares with Darin Tyson-Chan the importance her firm has placed on obtaining an Australian financial services licence and how this regime could eventually polarise the SMSF services accountants will offer in the future.
How did you come to be involved in the SMSF sector?
I have been in the accounting industry for about 27 years and my first exposure to SMSFs was back in 1995. The firm I was working for has some clients with SMSFs and slowly but surely over the years I just got more involved with that side of the business. I started working more closely with them on a compliance, tax and administration perspective and from there developed my interests in the other aspects of SMSFs. Then I went on and got my RG 146 qualification in 2012 and now I am currently finishing my diploma of financial planning so I can open up that scope of the services I can provide and know there will be no boundaries as to what I can talk to clients about.
What services do you offer SMSF clients?
Right now we offer admin, compliance, tax services. In recent months we’ve been working heavily around super changes that has involved a lot of advisory around compliance and tax relating to the $1.6 million transfer balance cap and the changes to the concessional and the non-concessional contribution caps. So we’ve been very busy with that. Essentially the plan with the firm is that within the next few months, and the expectation is before the end of the financial year, we will also have the full advisory arm up and running as well.
Is there one particular area of the super reforms that is causing more client angst than any other?
There are two major issues actually. For those clients affected by the $1.6 million cap, it’s that element combined with the impact it has on the capacity to make any further non-concessional contributions in the future. That’s a big issue for those people. For those clients not affected by the $1.6 million cap, their focus is more on the changes to the concessional and the non-concessional contribution caps. We have just done a lot of education around this issue with our clients and letting them know what the changes are there. Another factor impacting people affected by the $1.6 million cap is the complex calculations needed in relation to asset values, not just now or at 30 June, but when they eventually sell those assets. These calculations happen not only now, but also in the future, meaning it is not something to address now and think it’s done. It’s going to have to be managed and monitored just like the $1.6 million cap, so there is a lot more compliance work involved moving down the track for anyone in that space.
Your firm is going through the process of getting its own licence now, but with no financial services licence how hard is it to limit your client conversations within the boundaries of the law?
It’s exactly the reason why we have chosen to get the full qualification and the full licensing. We felt even with a limited licence, it’s limited, so the conversation is still restricted and in our view that just isn’t a good solution and not the way we wanted it to work as a firm. Working within the law without being licensed has been difficult but not unmanageable to date. We’re very open and honest with our clients and we just tell them at the moment this is the scope within which we can have a conversation and we are not providing you with financial advice. We let them know we can certainly refer you off to some really good financial advisers we know if you want to talk to someone about investments or insurance or establishing an SMSF. That approach has worked, but part of the reason we have looked at getting the full licensing is because the feedback from our clients is they really just want to talk to us in the first instance. They don’t mind if we then partner up with really good expertise in different areas because we are not professing to be experts in every area, but they just want us to be the first point of contact. So we thought the only way we were going to manage those client wishes long term is to have the full licensing. Having the limited scope at the moment is manageable, but I don’t think it is sustainable and I think that a lot of accounting firms are finding that.
How arduous is it to get your own licence?
I think there is a combination of things. In terms of the technical content of the actual qualification, I haven’t found it difficult. As a chartered accountant I found it reasonably straightforward to get through the actual education piece. It has been the time management to be honest that’s been the most difficult part. Generally we are all either running our own businesses or working full-time in the industry already, we are dealing with a lot of changes in the industry, which is adding to our workload as well, and then on top of that we are trying to get that qualification piece done. All of those layers mean that it is quite difficult to stay on top of it sometimes.
I think what we’ll see is a certain group of accounting firms that simply just choose to shy away all together from the advice piece and I think that they may just drop off from the SMSF space completely because it is going to become too difficult for them to maintain that compliance perspective when they’ve historically come from a purely accounting and tax background.
Sarah Robinson
So through your own experience has the low take-up of the licensing regime by accountants surprised you?
I’m not surprised at all and I think what we will see is an even greater divide as time goes by. I think what we’ll see is a certain group of accounting firms that simply just choose to shy away all together from the advice piece and I think that they may just drop off from the SMSF space completely because it is going to become too difficult for them to maintain that compliance perspective when they’ve historically come from a purely accounting and tax background. And then I think that you will have the opposite end of the spectrum with firms like mine which just embrace the whole advice proposition because I really don’t think there is a middle ground. I don’t think that is a good model; I think you either need to be full advisory or not touching that financial advisory space because it’s very easy in the middle ground to cross the line when you are having a conversation with clients without even intending to do so.
If that’s the case, do you think obtaining an Australian financial services licence will increase the number of referrals your firm receives?
I am not sure we are expecting an increase in referrals from external sources, but I certainly think we will see an uptake of advice within our existing client base which will have its own organic growth impact. But I also feel it will give our firm the opportunity to work together with other professionals within the industry because, like I said before, we don’t profess to be experts in all aspects of servicing SMSFs. We just really want to be able to have the conversation with our clients. So we will form partnerships with other financial advisers, stockbrokers, insurance brokers, mortgage brokers and other people within the industry who are really good at what they do to work together to provide a good solution for our clients. I guess in that sense, in terms of referrals, there is potential from forming those partnerships for all of those people within the group to be positively impacted through referral of client work.
What’s the most significant change you’ve seen in the SMSF sector?
There are a couple of significant changes. The most topical change is the changes to the legislation. But over the past 10 years the most significant change to the sector, and how it operates from a professional’s perspective, has been the huge uptake in automation technology and outsourcing. From a client perspective it has been a good thing because we have seen a shift from clients really not having a lot of information at hand, and possibly not being very well educated from a trustee obligation perspective, to being able to have information reasonably quickly and also being educated by the professionals on what their obligations are and what they need to do on a regular basis. I don’t think either change has been bad, but too many more legislative changes are not great for the industry just because it unsettles people. They start to feel concerned that they don’t know what is around the corner so how can they make any decisions now, particularly if it is going to be retrospective in its nature, so hopefully we do not see too much more unsettling of the industry in that regard.
What’s the one thing you’d change about the SMSF sector if you could?
There are probably two things I’d like to change. One would be to have less shuffling of the superannuation goalposts so people have more confidence in the industry. That’s not just for SMSFs but superannuation across the board. I understand the government needs to get the superannuation industry into a space where there is a balance between what the members want to get out of their superannuation and fairness in terms of revenue, but I think it is going to be damaging to the industry as a whole if they keep making changes. Perhaps if they can leave it well enough alone for a little while, that might be nice especially after these recent changes. The other thing would be to ensure the continuing work with SMSF members and trustees to make sure they do understand what it is that they are investing in when they use an SMSF as opposed to an industry and retail fund.
What’s the greatest challenge for the sector over the next year?
By far it’s the implementation of the super reforms and then the ongoing monitoring of them because this is not going to be a simple matter getting through to 30 June. The whole landscape is different now and there is no set-and-forget strategy. Clients’ situations are going to have to be constantly monitored to ensure the caps are not breached and so on. So the whole way the industry operates will be different in the future and that will likely be the most challenging element.
