Accountants who are not licensed to give limited financial advice are restricted to giving “factual” advice, tax advice and traditional accounting services, such as preparing financial statements.
Those who want to give detailed personalised financial advice, including advice on particular financial products, need to be operating under a full licence, as most financial planners do.
The intention of the original government policy, given the problems in financial planning, was to have a single licensing regime that applies to all, regardless of whether the advice is provided by a financial planner or an accountant.
For university educated accountants, the “content” that they have to learn to give limited financial advice was hardly a problem. It’s the red tape and cost of getting a financial advice licence, or being “authorised” under someone else’s licence, that is likely the bigger obstacle.
In its submission to the 2020-2021 budget that will be handed down by the Morrison government in May, the SMSF Association is calling for the licensing regime for those who give financial advice to DIY super fund trustees to be reformed.
The association says that in the almost four years since the changes came into full effect, the number of accountants who can give financial advice is a fraction of the 10,000 that the Gillard government had originally envisioned when it announced the changes in 2012.
That means, for example, a trustee’s unlicensed accountant is unable to answer questions on such simple things as starting a pension from their SMSF.
The trustee could go to a licensed financial adviser but the documentation of the advice could be disproportionate to the simple advice the trustee seeks.
The association says the cost of the advice from a financial adviser could be more than many DIY super fund trustees are prepared to pay.
It is an unsatisfactory situation for the more than 1 million members of SMSFs, which hold about $750 billion in retirement savings.
The SMSF Association says the solution is that those who provide advice to individuals about SMSFs should be required to have specific SMSF education and qualifications that underpin their advice.
It would rectify the “advice gap to allow appropriately qualified SMSF advisers to provide low-cost, simple advice,” said the association’s chief executive John Maroney.
Any move by the government to take up the association’s proposal would have to ensure that the higher standards that are now in place for those giving financial advice are not undermined.
Writes about personal finance for The Sydney Morning Herald and The Age.