Online financial product advice provider Accountants Scaled Advice Platform (ASAP) has raised concerns over the creation of an SMSF advice “black hole”.
The concerns surfaced following the conclusion this month of a survey ASAP conducted among 70 accounting firms.
“Most accountants we speak with have actually stopped giving financial product advice, including those who went to the effort of becoming licensed,” ASAP chief executive Jim Hennington said.
Hennington said the situation seemed to contradict one of the main characteristics associated with SMSF trustees.
“SMSF clients by definition like to make their own decisions. They generally want a quick opinion from their accountant rather than a costly 20-page statement of advice,” he said.
“For the same reason, the hotly anticipated referral boom has not happened.
“Although 56 per cent of accountants previously said they’d refer SMSF clients to financial licensees, actual referral rates seem to be significantly lower.
“On top of this, many referred clients don’t move forward once they understand the cost.”
Both non-licensed and licensed accountants were more prepared to turn to digital advice as a means of providing this type of service to SMSF clients, he said.
He did, however, warn there were some critical elements that needed to be present for this type of arrangement to work.
“It must be noted that support for digital SMSF advisers is contingent on two critical issues: their ability to seamlessly integrate with existing tax and super advice processes, and the strength of their compliance framework,” he noted.
“The online service provider must protect the client, the referring accountant and itself.
“This isn’t like actuarial certificate provision or any other subcontracted digital service. The process flow and business rules must reflect the spirit and letter of the consumer protection licensing laws.”
To this end, ASAP has developed a 10-point due diligence checklist for practitioners looking to employ the services of a digital advice provider.
It includes measures such as ensuring the digital adviser must establish a direct fiduciary relationship with the SMSF client, conduct a personal fact find about the client, make further inquiries as required to give the advice, and supplement digital advice with human advice if necessary.