Accountants’ exemption unlikely to return

It is highly unlikely the accountants’ exemption will be reinstated, particularly given the recent reports on SMSF advice and revelations at the banking royal commission, according to an industry expert.

BT Financial Group head of financial literacy and advocacy Bryan Ashenden told the Class Connect 2018 conference in Sydney today this is not a decision that will be made based on pitting advisers against accountants.

Rather, given the Australian Securities and Investments Commission’s findings on SMSF advice presented in Report 575 in June and the banking royal commission revelations, it will be about client expectations of the accountant providing advice to them, which entails minimal expectations covered in legislation, Ashenden said.

“There should be minimum expectations that they should be entitled to receive in the person providing advice. And that has to be consistent,” he said.

In addition, the Financial Adviser Standards and Ethics Authority is expanding on these minimal expectations, he added.

“It’s a personal view but I would be very surprised, irrespective of which government we have in power after the next election, that the accountants’ exemption will come back into play,” he said.

“What we have now will be the framework that’s going to go forward for a number of years.”

He also discussed clients’ desire for investing in property within their SMSFs and warned accountants and advisers it is vital for them to ask clients what their ultimate goals are.

They must ask clients what they want to achieve, why they want to invest in property and what investing in property might do for them that they otherwise could not achieve, he said.

“As the advice provider, if we’d actually worked out their goal is actually not property, and they just see property as a means to get there, you need to be thinking about can you get there through other ways,” he said.

Clients’ desire to invest in property may stem from their desire to avoid volatility and they might believe property is the least volatile avenue to achieve returns, he noted.

Accountants need to ask themselves and clients questions to gauge what the optimal avenue is to achieve their financial goals, he said.

“So, is your existing arrangement actually going to help you get there? Do we just change the current investment mix? Can we take some of the volatility out that they’re concerned about? Are there other things that we can consider?” he said.

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