Opinions

CAANZ

Doing what you’ve always done: good or bad?

Liz Westover

When the topic of limited licensing comes up, a frequent response from chartered accountants is: “I just want to do what I have always done.” Yes, this may be a valid and certainly feasible strategy to adopt, but here’s why I don’t think it’s a good one.

What you’ve always been able to do

What you have always done isn’t necessarily what you have always been able to do, strictly speaking. To date (and up until 30 June 2016) without licensing, recognised accountants have only been able to recommend the set-up and closure of an SMSF. The accountants’ exemption doesn’t include telling a client not to set up an SMSF nor does it allow advising on rollovers. Furthermore, discussions on pensions and contributions are limited to tax issues only or factual information.

What licensing (superannuation only) will let you do

If accountants obtain limited licensing with an authorisation for SMSF and class-of-product superannuation only, they will be able to expand their advice offering with regard to super and SMSFs. They will be able to make recommendations for the set-up and closure of SMSFs, but importantly they will be able to talk to their clients about not setting up an SMSF if it’s not appropriate for them, rollovers from Australian Prudential Regulation Authority-regulated funds in the context of a recommendation to set up an SMSF and pensions and contributions beyond simply the tax elements.

Limited licensing with all authorisations

For those accountants who obtain authorisations in all areas – SMSFs, superannuation, securities, simple managed investments, basic insurance products and basic deposit products – the spectrum of strategic advice that can be given increases again. For the first time chartered accountants can assist their SMSF trustee clients in completing their investment strategies, as well as assist them in meeting their obligations to consider insurance for members. It is also worth noting this level of limited licensing is not restricted to SMSF clients. Advice and recommendations in these areas of authorisation can be given inside and outside of an SMSF.

The future of the profession

Regulatory change can often afford us the opportunity to reflect on our business – to take stock of how we are currently operating and make an assessment of how the future is likely to play out and how that might impact on the business. The questions to ask include: what services do we offer, what would we like to offer, what services do our clients need and want, will we stay relevant, and are there any disrupters that might affect the way we run our businesses?

The introduction of limited licensing is exactly one of those times. In considering the implications of the new limited licensing framework, practitioners need to look five years (or more) down the track to what the accounting profession will look like and what services clients will be needing and wanting from them. Technology, including data feeds, access to information and automation, outsourcing and offshoring, changes to tax compliance processes (simplified tax returns), competition, cost pressures, staying abreast of changes in laws, increased demand for investment advice and an ageing population demanding more estate planning advice will all play a role in realigning the services offered by accountants.

Entering the world of licensing will hold its challenges for accountants. It’s new, it will take time and it will force us to make decisions outside our comfort zone, and now that the clock is ticking towards the removal of the accountants’ exemption, pressure is building to force a decision to be made.

Be careful when deciding. If you remain unlicensed, you need to be very clear where the line is drawn on the advice you can give and you need to be ready to deal with clients who have questions you will not be able to answer. For those becoming licensed, be clear about what you will be able to advise on. Is super advice enough or would all authorisations be a better fit for how you want your practice to look in five years’ time?

The question I ask is: In the context of all of these pressures and developments, is it enough to still say “I just want to do what I have always done?”

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