Practitioners may need to completely change their billing practices for superannuation advice they provide from 1 July due to a combination of factors, including legislation that has been passed stemming from the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, an SMSF specialist has said.
“The bill that came out in 2020 [stemming from the royal commission], which has been passed, [says] advice that has been paid [for] from a superannuation account is limited to advice about particular actual or intended superannuation investments, consolidation of superannuation accounts, selection of superannuation funds or products, or asset allocation within a fund,” BT SMSF strategy national manager Neil Sparks told delegates at the recent Self-managed Independent Superannuation Funds Association SMSF Professionals Half Day Seminar.
Sparks added it would not include broad advice on how the member might provide for their retirement or maximise their wealth generally.
This development, coupled with a position the Australian Prudential Regulation Authority communicated in 2001 about financial advice that fees charged for the service can only be paid out of a super fund if it is aimed solely at the member’s interest in the fund, has significant implications for practitioners, he noted.
“[This means] the subject matter of your advice must relate directly to the member’s interest [before you can bill the SMSF for the service provided]. So [you’ll have to] think about the way you invoice your clients from a fee-for-service perspective,” he said.
“If you’re charging your client an all-encompassing fee of $10,000 a year, and you’re charging it to their super fund and that advice covers many, many different topics, the super fund may not be able to pay it anymore.
“So we need to start thinking about the way we’re actually invoicing our clients for the services we’re providing.”
