The latest SMSF Professionals’ Association of Australia (SPAA) polling has found 25 per cent of the industry body’s accounting members yet to be licensed as per the new advice framework have decided to continue to service the sector under some sort of licensing arrangement.
In addition, the survey found a further 50 per cent of non-licensed accountants who were SPAA members were “seriously considering” providing SMSF advice as a licensee or as an authorised representative of another Australian financial services licence (AFSL) holder.
“This is an encouraging trend, especially when you consider the timeline involved. Quite clearly members are thinking seriously about this issue and we would expect many of those considering this option to ultimately commit to it,” SPAA head of education services Liz Ward said.
Under the new legislation governing SMSF advice, accountants will need to operate under an AFSL by 1 July 2016.
Ward suggested accountants needed to carefully consider the difference between being a licensee or an authorised representative before making a decision on the course of action they would take.
She cited cost as one issue requiring serious contemplation.
“There are a range of costs that are being cited; we are hearing that the price to prepare and submit an application for a limited licence may be in the vicinity of $25,000 to $35,000 in the first year,” she said.
“This includes compliance consultancy fees to compile the application and having all the components required to support the application in place. A DIY approach is an option and could provide cost savings, but like all DIYs usually results in an increase in the time and input required by the individual.”
She also indicated there were advantages to being an authorised representative, including having access to more licence authorities and the provision of ongoing requirements being the responsibility of the licensee.
However, she also pointed out operation as an authorised representative could mean the practitioner would be subject to strict contractual requirements and restrictive practice branding rules.
“With either approach, accountants can expect to take up to 12 weeks from beginning to end of the application process, and when added to the required RG 146 or other types of training programs they need to do initially, the lead time starts to add up,” she said.
“In SPAA’s opinion, those who elect to be early adopters of the new regime and formally move into the SMSF advice space are likely to realise commercial benefits compared with those who come to it late. We are hearing of a number of accountants who are actively positioning their business based on their SMSF expertise.”