Bronny Speed co-founded AccountantsIQ out of her passion to help advisers adapt to being part of the financial advice licensing regime. She talks to Hrishikesh Joshi about the accounting community’s attitude toward the rules around the provision of advice and the importance of mentoring within the industry.
How did your involvement in the SMSF sector happen?
Well, my first qualification out of school was a physical education mathematics degree in teaching and I taught for four-and-a-half years. While I was teaching, I went back and started an MBA and then went into a postgraduate diploma in accounting. So I did one year of an MBA, then I went into accounting and I got a job in a chartered firm and that firm had a specialty in investments in super and SMSFs. So from 1990 I started in a business that serviced SMSFs.
Did you gravitate towards the SMSF portion of that firm?
No. That firm had five partners, and one partner was the investment partner and under the investment partner we looked after SMSFs. So that investment partner did all the investment and super and some conventional accounting work. My involvement was more general because I had to finish my accounting degree and then my postgraduate diploma and then my professional year.
More recently you established Accountants IQ. How did that come about?
I’ve always worked under a comprehensive Australian financial services licence (AFSL) and after working for organisations like Bridgeport and Mercer, a couple of other people and I started our own financial advice dealer group with Logical Financial Management being the founding partner firm. After commencing this dealer group it was announced in 2013 the accountants’ exemption was going to be scrapped and from 2016 accountants would then have to provide SMSF advice through a licence. So it was not about wanting to get back into the SMSF market, but rather the fact I saw this as a big opportunity to help accountants, which was my background, to become licensed. I had two business associates in Heffron that had a lot of clients who were accountants and needed help, and Smart Compliance. So Heffron provides the technical material for my clients’ statements of advice, Smart Compliance provides the compliance support, and I provide all of the licensing advice. I have, though, made a conscious decision not to have my own AFSL because I felt if I was encouraging small accounting firms to get their own licence and I had my own licence, I would be conflicted. So I remain an authorised representative of a separate licensee.
How effective has including accountants in the licensing regime been?
For the practitioners who only want to continue to advise SMSFs it hasn’t been smooth sailing. There was a lot of misinformation over the education requirements, which meant individuals who made early preparations did four units of study when in the end all they needed to do was one. Unfortunately, the one subject they had to complete was superannuation with an SMSF specialty. If they had been made to complete the generic financial advice unit, it would have probably helped them understand how to operate under a full AFSL. Combine the difficulty of adapting to this new regime with all the super reforms and the new FASEA (Financial Adviser Standards and Ethics Authority) requirements and you wonder how accountants are supposed to advise SMSF clients only. I believe there will be the possible need for another look at how these practitioners should be licensed.
Why do you think there was such a poor take-up of limited licences?
I can only speak for chartered accountants, but part of the lack of take-up was because accountants found the requirement to complete more study to be almost offensive. These individuals already have had to complete a full degree, with the right subjects included, as well as the chartered accounting program that encompasses three years of supervised work. So for the government to tell them they had to go back and do some more study was almost offensive.
Do you think the FASEA requirements will make the situation worse?
Yes, of course it will. You’ve got to understand the FASEA reforms affect anyone who provides personal advice to retail clients of a financial product. That means it can include some specialist chartered accountants specialising in business valuations. They don’t really need to know about the financial planning process which is part of the FASEA exam. But you have to pass this exam by next year or you can’t work under a licence. We’ve got these new reforms and it’s all about the traditional financial planner and I think there’s a mismatch between people who hold a licence and people who are traditional financial planners.
How would you rate the FASEA process to this point in time?
I have been intricately, intimately involved in it and it has taken up a lot of my time. The speed of change to the parameters has caused a great deal of confusion. It’s like the licensing regime whereby the announcement of how it is going to work gets released, but then there is a realisation something has been omitted and the rules get changed again. It’s been a very big change over a short period of time impacting a broad, diverse group of professionals.
What was the genesis for the mentoring program you’ve set up to help practitioners manage the FASEA requirements?
I have been most fortunate to have had some outstanding mentors in my career in teaching, chartered accounting and financial advice and they have had a profoundly positive impact on me. They’ve made me very passionate about it. I started AccountantsIQ to help people manage the licensing requirements and the mentoring program is just an extension of that process. People find their way into the advisory world from a variety of different paths and I don’t think we can allow their development to be determined by pure luck. So if a graduate or a newcomer to financial advice happens to fall into a firm that does mentoring well, we can’t just say “so be it”. If you want to reform the industry, I think you should make that reform practical as well and that’s why I’ve begun to establish the mentoring program. The concept has now been finalised and it’s just being put through some form of electronic platform.
What would you like the program to achieve?
My mentoring program is not just a compulsory FASEA program. It certainly ticks the FASEA box whereby if you’re a new entrant to the industry, you have to do this. But I contend a lot of the people on the financial advisers register have little industry experience. So we’re looking to provide them with experience in a structured way because there aren’t too many practical training programs for financial advice. So it’s for new entrants and people already in the industry. For existing practitioners it could help them down the path of a specialisation, for example, by completing [Aged Care Steps director] Louise Biti’s aged-care subjects, and they can receive CPD (continuing professional development) hours while they do it. In putting the program together I have gathered together many of our industry’s highly respected professionals who believe in the future of the industry and, to that end, we will help the industry positively develop through our proposed mentoring program. While we’ve all worked really hard throughout our careers and have collectively studied over a variety of professions, the advice industry has been good to all of us. Through the proposed mentoring program we can now give back to the industry.
What is the most significant change you’ve seen in the industry?
The biggest change has been the dominance of the vertically integrated advice model that developed after the implementation of the Financial Services Reform Act in 2003 and made it very difficult for smaller service providers to compete with the larger institutions from a cost perspective regarding things like compliance, insurance and research. So it’s the swing from the non-conflicted advice model to the vertically integrated model over time.
If there’s one thing you could change about the SMSF sector, what would it be?
It would be to simplify the rules governing how individuals providing SMSF advice can operate. For example, if you’re a chartered accountant with a tax agent’s licence and you want to deal with SMSF clients, you should be able to do three things. One, you can talk about tax strategies regarding contributions. Two, you can establish SMSFs and manage and perform the administration work for them. Three, you can provide advice about pensions. I want to see this simplified because the regulation is ruining that great accountant/client relationship.
What is the biggest challenge facing the SMSF sector in the coming 12 months?
Making sure the majority of practitioners get through the FASEA exam and making sure people stay in the sector. The SMSF space has a bigger exposure to accountants and they are opposed to sitting more exams and doing more study. Their attitude is to have everyone else catch up to them before any additional educational requirements are imposed upon them. It’s a bit hard for them to accept being told what they have done is irrelevant when you have people licensed through some dealer groups with an RG 146 qualification and nothing else.