Let accountants fill the advice gap says SMSF Association
The need for financial advice has never greater in the context of superannuation and retirement income adequacy and the discussion on delivery by suitably qualified professions needs to continue and be broadened, according to the SMSF Association.
What is more the SMSF Association is urging the Government not to rush to try to find solutions to Australia’s retirement incomes issues in circumstances where a number of policy initiatives are still in their infancy including the Retirement Income Covenant a the Quality of Advice Review (QAR).
Responding to the Treasury consultation on the Retirement Phase of Superannuation, the SMSF Association has pointed to the failure of the QAR to address the status of accountants and how this will only contribute to an “emerging advice gap”.
“To bridge that gap, the Quality of Advice Review recommended the introduction of a limited advice model for fund trustees. The objective being the enhanced servicing of, and advice given to APRA superannuation fund members,” it said.
“This has however created a divide, as those in the middle will unlikely be able to access quality professional advice. This is a significant issue for unadvised SMSF trustees.”
“Accountants have an important role to play in providing advice to SMSF members. To do so, they need an urgent, legislative solution. Accountants have been overlooked by the Quality of Advice Review, despite being in scope. As a result, they have not been considered in the proposed package of reforms from Government.”
“Appropriately qualified accountants have a role to play in helping to fill the advice gap that exists between financial advisers and the proposed advice regime that will apply to APRA regulated superannuation funds.
“This vital middle ground has been overlooked throughout the Quality of Advice Review, and financial advice reform agenda that has followed. This is despite the recommendations of the James Review, and the progress of other James Review recommendations through the Governments current policy agenda.”
The SMSF Association is also urging that the Government include SMSFs in any moves around the deductibility of financial advice fees from superannuation accounts, in circumstances where existing proposals expressly exclude SMSFs.
“Whilst these are important reforms, what has been overlooked in this process, is the need for the inclusion of an equitable legislative solution for members of SMSFs. SMSFs do not have a comparable provision within the superannuation law. As such, the sole purpose test, the prohibition on the provision of financial assistance to a member of the fund, and the operation of the early access tax penalty provisions are impassable barriers,” it said.
“This gap in the superannuation legislation has created a divide between members of APRA funds and members of SMSFs. When we compare the pair, one group of members can elect to have the superannuation account pay for the financial advice that relates to their interest in the fund, the others are prohibited from doing so. This also will exclude SMSF members from availing of the tax deductibility of certain advice fees as proposed.”
I read this stuff and just shake my head.
No – The answer is very, very simple.
Simply remove the insane amount of unnecessary red tape (which doesn’t actually help anyone) and the existing adviser numbers will probably be able to service three times the number they currently service (at a minimum) and at a much lower cost (per client).
What is not to understand ?
Where is that relief by the way ?
Unless accountants have jumped the hurdles advisers have had to jump over these past years then they should not be able to give advice.
Do we want to go back to the days of accountants recommending people start up a SMSF with a total fund balance of say $50,000 ? That used to happen ALL THE TIME.
When it comes to financial advice SMSF accountants are no different to union super call centre operators. They are unqualified, conflicted, sales reps pushing inhouse products without due consideration of clients’ best interest.
In my opinion, there’s a lot of unnecessary and arguably inappropriate SMSF’s that are kicking around thanks to accountants.
Labor owned & run by Industry Super
Liberals owned & run by Banks & Life Co
So neither care for SMSFs that are 30% of the Super system at $1 Trillion $$$.
About time SMSFA start making a lot more noise, rally Advisers, rally accountants, rally the SMSF members as a serious lobby group. AND MAKE SOME REAL NOISE.
Oh goody, another day and another group wanting to get a free pass to provide financial advice in the name of access.
Let’s just open the door to everyone and we can have it all.
Superfund advice, bank advice, insurance advice, accountant advice, Government free service advice, internet huckster and charlatan advice, go to your local supermarket and get advice.
What’s the point of having all of these professional standards and red tape for real advisers (along with the education requirements) when you afford the ability for someone else to do the same as you without these hoops.
Talk about an unlevel playing field.
A joke.
Couldn’t agree more with this article. Somehow, the message has got to get through to Jones that SMSFs are different to APRA funds, as is the membership. 2 to 6 members – all required to act in a trustee role compared with ‘000 and an institutional trustee. And then there is the fact that SMSF trustee’s design their own investment strategy and will often choose to invest in the real asset class plus cash and credit with no allocation to the equities or uncorrelated sectors. So in that case, where is a financial adviser that will be bidding for that work? It is accountants that deliver advice to these SMSFs and as amply demonstrated, don’t generally wade into advice regarding the investment selection etc.
But what they do is fill the strategic advice gap. A SMSF member in a fund that is weighted to property and cash still needs contribution and retirement advice. Importantly, they need to have a succession plan for themselves as well as the SMSF. A lot of the advice is around the structure and from the view of an accountant, a SMSF is an entity much like a trust. It is only when it is capitalised that it becomes a superfund. Like with a SMSF, the accountant usually stays well away from the investment strategy of a trust but provides critical advice regarding the trust as an entity, and importantly, all the tax considerations.
Unfortunately while ever there is no carve out for strategic advice in the Corps Act, SMSFs will be considered a financial product and all the attendant prescription from Chapter 7 will prevail.
The Labor Party loves the “nanny state” approach to policy. They take the view we all need saving from ourselves. Whilst some may well need that approach, as a blanket it is insulting.
Yes agreed, strategic advice should be much easier to give, for both accountants and financial advisers.
As a SMSF Specialist Adviser for 20 years there are plenty of clients with property, cash etc or self directed investors that I provide strategic only SMSF advice too. Contributions, Pensions, SMSF Estate Planning, etc
The problem is we have to jump through all the AFSL mad Regs, Red Tape and crazy costs.
V’s
Accountants giving the same strategic advice and Zero AFSL Regs, Red Tape or crazy costs because most accountants have given up on Limited AFSL’s once they have seen the mad costs and BS paper work.
And ASIC has never once busted a single Accountant for this strategic advice with zero AFSL compliance.
Another great example of a totally broken system, proudly brought to us by Useless Canberra Clowns !!!!!!!
The only thing I agree with you about is that the Labor Party loves a nanny state.
If you want to provide SMSF investment advice, go and jump through the hoops everyone else has to. No carve outs.
How many of those 2 to 6 members actually know what they are doing as trustees? The typical multi member SMSF will have one domineering overconfident bloke who thinks he knows what he’s doing but doesn’t, and his wife and potentially kids who neither know nor care about superannuation, and just do what they’re told.
I wonder how many accountants set up SMSF’s because their clients are (overconfident) crypto experts now? lol
Plenty of AFCA complaints around direct property within SMSF’s. Why not just get qualified and do the advice? If an accountant is providing strategic advice, then they are providing financial advice and they need to be licensed.
Also, an adviser would be very hesitant to recommend a SMSF highly weighted towards property and cash, and relying on contributions to maintain the likey debt and other fixed expenses that go with it. Lastly, you cannot just scope out your advice so you totally neglect the investment strategy and recommendations when it it crucial to the SMSF.
Seriously… I know many accountants and not one of them has the first idea about holistic financial planning. Stick to tax returns, like I stick to my job!
For an organisation that has both accountants and financial advisers paying membership fees, they certainly show an ongoing bias towards only one sector of their membership…
This might make their member accountants happy to see this advocacy, but it doesn’t endear them to their financial adviser members…
Let them also pay the ASIC levy.
…and the CSLR too!
Geez – stick to your lane accountants!