Accounting, Financial Planning, Superannuation

Best interest may require referrals

SMSF accountants best interest

SMSF accountants facing questions about investments may need to refer clients to other advice providers under best interest obligations.

SMSF accountants need to keep an eye on what information they provide to clients seeking investment strategy assistance following the COVID-19 market downturn and, for their best interest, should be willing to recommend they seek personal advice, an accountant licensing expert has claimed.

Holley Nethercote general manager Kath Bowler said the issue of investment strategies would continue to be a topic of conversation for SMSF advice providers given the state of financial market.

“As accountants you will be asked about this more often than in past, if changing investment strategies is a good idea and if clients can pick your brains,” Bowler said during a recent webinar on accountants and SMSF advice.

She pointed out SMSF accountants licensed to provide advice were required to comply with Standard 2 of the Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics which requires advisers to act with integrity and in the best interest of clients.

“It is more than just best interest related to advice, it may be that acting in their best interests means you have an obligation to recommend they look for personal advice around pension needs instead of taking their word their strategy is okay.

“You have to take the higher ground if you have knowledge and expertise and make decisions and recommendation in their best interests. Sometimes dealing only or execution only is not a good idea for clients.

Bowler added that accountants who were not licensed could also still act in these circumstances but she reminded them to keep any advice at a non-specific level,

“You can advise clients of the need to have an investment strategy and can document an investment strategy and may even discuss diversification in their strategy but use regulation 7.1.33A [of the Corporations Regulations 2001] as a guide and keep it at a high level,” she suggested.

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