Accounting, Financial Planning

Trustees disregarding licensed advice

licensed SMSF advice

Anywhere between 33 per cent and 50 per cent of SMSF transactions are being executed without the aid of licensed advice, a new survey has shown.

A recent survey among accountants has found between 33 per cent and 50 per cent of SMSF transactions, in the main involving fund establishments and drawdowns, are being performed without the use of licensed advice.

The findings come from responses from over 300 accountants to a study conducted by Apricot Actuaries which is a new business arm belonging to digital advice provider A.S.A.P. Advice.

“Two major facts stand out for me. Firstly, the average number of transactions per accountant is low, at only two new SMSFs per year and three new pension commencements,” Apricot Actuaries chief executive Jim Hennington said.

“Secondly, even when transactions were implemented without licensed advice, 83 per cent of accountants still provide exempt tax advice and factual information at least part of the time to help their client make decisions. Is that legal? Opinions abound but nobody can point to a clear answer to that fundamental question,” he added.

According to the study, 58 per cent of respondents were either concerned or very concerned their SMSF trustee client had not received licensed advice regarding other aspects of their funds but were still prepared to service them.

Locke said the results indicate SMSF trustees have rejected the licensing regime imposed upon the sector with a combination of the price charged for advice and a lack of trust in advisers being the main drivers of this sentiment.

“Sixty-six per cent of accountants said that when no financial advice was given it’s because the client was reluctant to pay extra fees. Fifty-one per cent said their SMSF clients don’t trust financial advisers and 45 per cent said the licensed advice component adds little value,” he said.

The conclusion stemming from the survey is the Australian Securities and Investments Commission’s aim of improving the quality of SMSF advice provided, through the abolition of the accountants’ exemption and the imposition of the licensing regime, has failed from Locke’s perspective.

On the contrary the current licensing regime has increased the risk of SMSF trustees of receiving tax advice only.

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