After 20 years in the industry, BDO private clients partner Kim O’Brien continues to be captivated by superannuation and its challenges. She tells Krystine Lumanta about the issues she’s seeing around overseas pension fund transfers into SMSFs, the need for strategic planning to evolve and the new licensing regime.
How did you come to be involved in the SMSF sector?
I started in 1993 in a small boutique accounting firm in a regional area. It was my first job out of school and back then they really believed superannuation would become a big part of the industry, but it really wasn’t at the time. I liked it because it was different to the corporate and individual tax I’d been doing, so I wanted to jump in on this because super was going to have a very big role. I’ve always done business services or client services work as well, but the practice had just grown and grown. Then I changed firm and came to BDO, formerly PKF, to take over the specialisation group about 10 years ago. BDO has always had a superannuation specialisation division. I’ve been doing this for 20 years now and I still love it as much as I did when I started. Nothing has changed the passion I feel for it. I think that’s why I’m still doing it. It adds so much value to clients.
Your role is BDO private clients partner. What education have you undertaken over the years to reach this position?
I did my Bachelor of Commerce and Accounting then the chartered accountant designation with the Institute of Chartered Accountants, as it was known then. I did a Graduate Certificate in Financial Planning to get started and I also became an authorised representative in the late 1990s. After that I did a full Diploma in Financial Planning and completed the SMSF Association accreditation to be a specialist adviser. I don’t feel like it ever ends, but I always maintain we give the best advice that’s the most up to date so I know you have to continually study all the time. While I might not be doing a course right now, I read cases and legislation and try to work out new strategies for clients as super is always developing. I don’t feel like it’s a role where you can tick off a degree and your study is over. It’s constantly evolving and changing, so you have to keep up to date. Also we’re a bigger firm so it’s an expectation we hold as well.
What does your role involve?
The work I do is mostly SMSF-related. My day-to-day role is providing super advice to clients, spanning borrowing within super, bringing foreign super back into Australia, employee share plans, as well as the more common pension and contribution planning. We do a lot of work on how to transfer wealth to the next generation and how super can be used for children. Naturally we do a lot of estate planning work, so it’s beginning to end. We have a specialised team, which is quite small, but they’re very good at what they do. We work internally with the rest of the practice, but we also work outwardly in the market. Part of that is the Professional Practices Network (PPN), where we provide advice to smaller accounting firms on any super issue that’s very technical or where they might need a sounding board or a second opinion, at no cost. Just providing that advice to other accounting firms takes up a lot of time. So it’s a bit of a business-to-business role along with the business-to-client piece. The PPN also gives us an idea of what challenges clients are facing. It makes you more passionate to bring about change because you may find there really are some elements that are unfair or are not quite right, so we’ll see how we can try to fix those.
What does being a member of the BDO national superannuation committee entail?
It’s an internal focus group to help us run our business. We meet monthly to talk about the day-to-day issues of the practice, what our positioning is out to the market and how we can leverage off each other. We’ll hear about a practical issue one of us is going through and see how we can help. We’re not one firm, but we behave like one firm in the superannuation team. We also share ideas and the latest strategies we want to present to clients and we look at other issues in terms of possibly writing a white paper to the government to see what impact we can have. I might work with one of our tax partners to see if there’s anything we can do to drive policy change.
As a superannuation specialist, what kind of service has become most common with your clients at BDO?
We are seeing a lot of borrowing and a lot of property transactions still involving unit trusts and groups of people coming together to make an investment. Clients are always doing pension planning, but these borrowings are still a really big part of our practice. We’re also seeing a lot of people who are trying to move their pension from overseas back to Australia. That’s really problematic in the current framework actually after changes in April last year are proving to be quite challenging. There are quite a lot of people who want to move their retirement savings from an overseas fund into their SMSF, but right now it’s almost impossible to do. Timing is crucial regarding when they become a resident and how much of it is taxed. And sometimes it’s too late. I always tell clients they need to plan their move back to Australia and talk to an adviser here before they do it so they can get the timing right and save some tax when bringing it back.
How do you see strategic superannuation advice developing or is it unchanging?
It has to develop. Given the changes we’re facing in the industry, not only the licensing but also the auditing, you have to hold a strategic view for your practice and you have to be specialising in this. At the same time, clients are demanding strategic advice. They don’t just want to see someone to do their tax return, their financial statements and get their audit done. They’re looking for a deeper level of engagement than that, a deeper relationship. You go through a journey with your client through the growth phase to pension, then the estate phase and that concept of trusted adviser applies more in this arena than it possibly does in normal tax and accounting because you’re dealing with their personal affairs and changes that happen in their lifetime. So having a strategic culture and offering to clients is paramount to being a successful adviser. I believe you contribute something to that family. It goes beyond just the tax return. You can take it to another level.
What are your thoughts on specialisation in the SMSF sector?
You have to specialise now. Given the licensing change and the audit regime we have in place, you can’t afford not to specialise in super. I’ve often said if you put your toe into something, you create a ripple, but why not jump in and create a wave? If you do it a lot and you want to concentrate and specialise in it, you’ll give good advice, otherwise you’ll fall over. If you just dabble in this area, you’re your own worst enemy. I’d rather be boots and all in it and do something really well than half know something and be dangerous.
What’s the biggest change you’ve seen in the industry?
The biggest change I’ve seen is this licensing regime. I think it’s for the better. Clients should get sound advice. The other thing I feel that has not been good for the industry is the changes to the contributions caps. They’re too low. There should be some flexibility around how you allow Australians to catch up on what they’ve lost.
If there was one thing you could change about the SMSF sector, what would it be?
It should be fairer for people to put money in. It’s quite clear the tax office and Treasury don’t want super to be a wealth environment because it can be seen as a tax haven, per se, but at the same time, if they don’t want Australians to be relying on the age pension, we really need to create an environment that’s attractive for people to put money into super. And they need to create stability. I just wonder if bringing in some certainty about that would help create that stability.
What’s the key challenge facing the sector over the next 12 months?
It will be adapting to the licensing. If you look at the way the SMSF auditor regime started, we’re now starting to see, after 12 months, auditors getting disqualified. The same thing will happen in relation to providing advice under the licensing – it’s going to create that same period of time where they either will or won’t license and then we’re going to potentially see a bit of damage. And if that’s not managed well, it will bring the whole sector into disrepute. So that’s the biggest challenge for me, the reputational damage that will come from people not following the regime. They may not want to follow it but there’s a big risk there. A lot of the smaller accounting practices have jumped on board, which is great. Many of the older professionals are still umming and ahing about it. Being involved in the financial services side is such a different way of delivering a strategy to a client. Having to sit there and fill out forms is something a lot of them aren’t used to, so I can understand why there’s a lot of hesitation to the change. But once you do a couple, it’s not that hard.