Client perception of receiving advice crucial

Accountants choosing to continue providing services where holding an Australian financial services licence is unnecessary have to ensure their clients do not perceive they are getting licensed financial advice, a specialist lawyer has said.

“One of the key things with financial advice is that it is not just necessarily what you say to the client, it’s how the client takes it and how they interpret it,” DBA Lawyers special counsel Rebecca James said at a strategy seminar in Sydney last week.

“So if they feel like you’re making recommendations or [giving] advice, then you could be at risk.”

According to James, this set of circumstances has increased the importance for accountants to maintain detailed documentation regarding the nature of the services they are providing.

“[It may mean] providing clients with written disclaimers making sure the scope of the work is very clear,” she said.

“So it’s really important [to spell out] ‘I’m going to be providing you with business structuring advice and tax services and it is factual information only on the contributions that are available to be made into super and not recommending what amounts you actually contribute to super’.

“That would be financial advice [and you should then] recommend [they] go to a licensed financial planner.”

She added accountants who referred clients to a financial planner also needed to stipulate the parameters applying to the referral arrangement.

“Just say you facilitate an introduction to a financial planner, it’s really important you emphasise with a client they need to be happy with the services and the fees provided and that you’re not guaranteeing the financial planner and you haven’t done due diligence on them, unless you have gone to that extent,” she said.

“And if you get any commissions or benefit from referring, then that needs to be disclosed to the client.”

Furthermore, she suggested if an accountant attended a client meeting with a financial planner, it was important the accountant specified the role they were playing at that time and that they were not commenting on the financial advice being provided.

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