A panel of industry advice experts has identified the new licensing framework for accountants looking to provide financial advice for SMSF clients to be problematic from an operational perspective on a few fronts.
Firstly, if accounting firms, in particular smaller ones, seek to gain either a full or limited Australian financial services licence to allow them to provide proper SMSF advice, they will have increasing difficulty maintaining a professional degree of independence and avoiding conflicts of interest.
“Come 1 July 2016, you’re going to find a bit more siloed advice. It’s going to be difficult because we have accounting firms that want to do the best thing for their clients and still provide that sort of advice, but now they can’t,” HLB Mann Judd wealth management director Andrew Yee told a recent selfmanagedsuper roundtable.
Secondly, outsourcing may need to be embraced more vigorously, either to help achieve independence or assist clients with their SMSF advice if the accountant chooses not to enter the licensing regime.
Industry experts recognised that could be difficult from a philosophical perspective as traditionally accountants had been reluctant to make referrals to other financial services practitioners.
“Isn’t there reluctance among the accounting community to actually outsource any part of their client work, including advising specialist areas like self-managed super funds?” Makeham Financial Services principal Simon Makeham told the roundtable.
SMSF Strategies principal Grant Abbott agreed, saying: “I couldn’t imagine them doing that.”
Makeham concluded the situation could lead to a poor advice outcome.
“So, on the whole, they’re very reluctant to allow their client to go outside and, in doing so, what they’re actually achieving is delivering inferior advice to their client or not delivering any advice at all. That’s the problem,” he said.
Yee concluded while accountants had been reluctant to provide external referrals or outsource, they now had no choice but to do so.
“We can’t put a fence around our clients anymore,” he said.