Only 1000 accountants had successfully obtained either a full or limited Australian financial services licence (AFSL) during the past 12 months, but as many as 12,500 unlicensed accountants were still expressing interest to provide SMSF advice, according to a new report.
The Investment Trends “2016 SMSF Accountant Report”, released today, revealed that including the 1000 accountants who had moved into the licensing world, there were now 5500 accountants meeting the licence requirement.
“Despite the deadline being only being a month away, there are still 12,500 accountants who want to operate under a full or limited AFSL but who haven’t completed the qualification process,” Investment Trends senior analyst King Loong Choi said.
“It is typically the sole practitioners and those working in small accounting firms who are yet to make the move.
“If they don’t get licensed or set up referral networks in the next 30 days, they will have to send clients elsewhere for SMSF advice.”
Further, more accountants were turning away from the route of applying for their own AFSL, with costs and compliance obligations growing as barriers, Choi revealed.
“Dealer groups such as Count and AMP’s SMSF Advice are offering to support accountants as the deadline for the removal of the accountants’ licensing exemption looms,” he said.
“These dealer groups can provide access to an AFSL, as well as practice management support, professional indemnity insurance and technical support.”
As accountants moved to operate under a full or limited licence, more were expected to become involved in providing investment advice to their SMSF clients, the report said.
“There is a huge opportunity for accountants to grow their SMSF revenues and broaden their proposition to SMSF clients by making the move to provide investment advice,” Choi said.
There are 9000 accountants who have made the decision not to become licensed and will instead refer their SMSF clients to a licensed advice provider.
The report also found newly licensed accountants had a strong appetite for education.
SMSFs accountants believed their understanding of investment products was low, thus fund managers and brokers had an opportunity to step in and help accountants with the right set of tools, support and education, Choi explained.
“Accountants want to understand the tax advantages of individual investment products and two in three want comparisons between investment products, as well as strategies for using them within clients’ portfolios,” he said.
Annuities, direct shares, managed funds and exchange-traded funds were the top products that accountants wanted to receive more information and education on before recommending them to their SMSF clients, the report revealed.
Another finding in the report was that at an industry level, accountant satisfaction with their SMSF software had remained high over the last 12 months.
Cloud-based solutions, including Class Super and BGL Simple Fund 360, were rated the highest in terms of overall user satisfaction.
“With the level of time and effort needed to service and administer SMSFs, accountants are attracted to the ease and efficiency benefits of cloud-based solutions,” Choi said.
“One in four accountants intend to start using a new SMSF software provider in the next 12 months, with over half intending to use a cloud-based solution.”
The report was based on a survey of 1182 accountants in public practice and was concluded in February 2016.
