A significant number of accountants are deciding to jettison financial advice from their service proposition due to the associated risk involved, a senior advice expert has said.
“People are finding the risk of running financial advice in an accounting firm, with a limited licence, is getting to a point where the risk is higher to run it than the risk is not to provide the service to clients,” Chartered Accountants Australia and New Zealand financial advice leader Bronny Speed told attendees at the SMSF Association Sydney Local Community Christmas lunch last week.
“I’ve had long chats to accountants who say they are going to hand back their licences and when I’ve asked them why, they say ‘I’m really scared that I might inadvertently do the wrong thing’.”
According to Speed, the reality is that for a large number of accountants the amount of practice revenue made from providing financial advice tends to be small.
“So they’re saying: ‘The risk of having ASIC (Australian Securities and Investments Commission) come in and say that my advice wasn’t right when we are trying to make it right may impact my total accounting business and it’s better for me to say to a client I can’t do that,’” she said.
She pointed out the current rules governing what advice accountants can and cannot provide are impractical.
“You can’t have professionals saying: ‘I’m sorry, but I can’t tell you the level of contributions you need this year even thought I do everything else for you. I look at your self-managed super fund, I look at your business, I look at your cash flow, I look at your level of debt, I look at your family circumstances, but I can’t tell you exactly what level of contributions you’re allowed to have this year,’” she said.
“So there is a growing trend [in the number] of accountants who are thinking about giving it away.”