According to the April 2010 Investment Trends SMSF Investor Report (based on a survey of more than 1900 SMSF members), 47 per cent of investors said their main reason for setting up an SMSF was to have more control over their investments; 35 per cent said their accountant advised them to set up an SMSF; and 29 per cent of participants said their financial planner advised them to set one up.
The question of who exactly is able to give advice on SMSFs is a licensing issue that will affect accountants providing basic structural advice.
Andrea Slattery, chief executive of SPAA, says that a streamlined licensing process is desirable to ultimately mark out what is appropriate to address Cooper’s removal of the accountants’ licence exemption.
“We’ve been very much in favour of a restricted licence rather than an exemption,” she says.
“The reason we want this is because accountants don’t want to provide investment advice generally. They want to provide accounting services; but currently, they don’t have the ability to provide choice advice – they don’t have the ability to say to a client, ‘You should or shouldn’t be in an SMSF’, or ‘You should or shouldn’t be in another super [fund]’.”
‘I’d emphasise that it’s done correctly with an eye for compliance… it’s about principles’
Slattery’s duty is to see this through, working with the relevant bodies that will support SPAA’s position on this policy.
There is a strong possibility that SMSFs could break through their natural ceiling – that is, the money in SMSFs may go past its maximum capacity – and Macquarie’s Shirlow believes the SMSF sector will continue to thrive.
“I think the increased focus on competency standards, both for advisers and auditors, will lead to some increase in costs associated with SMSFs,” he says.
“I do think the Government will be looking closely at recommending SMSFs to people [and at the same time] it will be wanting to make sure that SMSFs are not being recommended to people who don’t have the super account size to warrant an SMSF.
“That might curb some undesirable growth of the SMSF sector, but I think there will be healthy growth.”
When these SMSF changes become set, it’s going to mean “a massive change for the licensees from the terms of how they’re going to decide who they’re going to authorise to do what”, says La Greca.
“We will start to see differentiations between advisers. We might even find the way adviser practices are structured in terms of their offices – [they] will have a change in their dynamic, depending where planners want to work in this space.
“So the idea of specialisation actually fits nicely because some people say, ‘I don’t want to do three years of training to do this, but I really like doing this part of what I do, so I’ll go there and do the training required’. The non-accounting professional services actually have a big opportunity out of this space, there’s no question.”
In an industry that appears to be on its way to improvement, Slattery continues to promote and support specialisation for the SMSF sector, for the benefit of financial planners.
“I’d really like to see more specialists in the market so that consumers can recognise a professional,” she says.
“We’re really looking forward to 2011; we believe it will be a great year for superannuation and, in particular … the SMSF advice piece. The recognition of specialist advisers and specialists auditors will be the first step in developing a true profession.”
Government approved Cooper recommendations:
- An SMSF specialist component will be added to RG146
- The accountant exemption will be removed and may be replaced by a restricted licensing framework
- SMSF auditors must be registered with ASIC who will set competency and knowledge standards to meet compliance-based regulatory demands
- The ATO will have power to issue greater penalties, direct a problematic SMSF to be fixed and be authorised to produce SMSF statistics
