Accounting, Investments

Give accountants freedom to talk investments

Accountants investment advice

Qualified accountants should be free to talk more generally about the investment needs of SMSFs.

Calls to allow suitably qualified accountants to provide strategic advice to SMSF clients should be expanded to include non-superannuation advice which would direct people to licensed advice or investment providers where required, according to the head of an investment platform.

OpenInvest chief executive Andrew Varlamos said there has been confusion around the provision of financial advice and product advice for more than 20 years, which still prevents accountants from providing advice despite their high level of skill and training.

Speaking with selfmanagedsuper about the Quality of Advice review, Varlamos said there had to be a demarcation between what was personal advice and the provision of financial solutions and this could impact the provision of advice by accountants.

“A better way to liberalise rules that pertain to accountants is to allow them to talk in a more natural way and provide factual information to help people understand what their different options might be,” he said.

“Many specialised accountants have got tremendous skills, training and credibility to do certain things and they should be allowed to do [them].

“At the same time, if they’re not investment experts, most accountants don’t want to talk freely about where their clients can find professional expertise for investments.

“They can actually do that today, but they almost have to have the legislation in front of [them to] remind themselves where the border between information and advice is and that means in practice accountants are naturally quite apprehensive and don’t have many natural flowing conversations around the needs of their client.”

He said the current advice and licensing restrictions meant accountants were restricted from helping SMSF clients where it was clear their current investment portfolio mix was inadequate for their long-term needs, nor direct them to a third-party provider who could help.

“That would be advice at the moment as they have expressed an opinion or referred to an alternative solution even though it is a natural form of conversation in which the accountant is not benefiting from at all by highlighting the risks and the alternative solutions the individual might pursue instead,” he said.

“Everyone in the SMSF sector knows that self-directed portfolios are highly concentrated in ASX (Australian Securities Exchange) listed stocks or with contributions sitting in cash and it can be solved through access to professional diversified portfolio management and with individuals the fund trustees know and trust – their accountants – being able to just speak openly and more flexibly about risks they are running.”

He said this shift would have a wider benefit for those seeking cheaper advice beyond superannuation and SMSFs.

“This is more than just for SMSFs. Every SMSF has real people as trustees and directors and in many cases they’ve got children, and every family head wants the best outcome for themselves and their families,” he said.

“It would be great if accountants were able to help them as a family. Even if the kids got $10,000 in a share trading account, no one is going to give them a thought.

“To be able to highlight just how hard it is to invest and that 90 per cent of people lose money but you can put that in a professionally run portfolio across diversified asset classes is a better solution for that kid.”

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