As many as 1000 accountants will transition from advising on self-managed super funds to offering a full financial planning service by 2016.
While Minister for Financial Services and Superannuation Bill Shorten expects to see up to 10,000 accountants become licensed under the recently introduced limited Australian Financial Services Licence (AFSL), which will replace the accountant’s exemption from next year, questions remain over which business models will best manage the new environment.
The regime will offer a range of options to accountants, from those who simply wish to advise SMSF trustees to those who want to explore a full-service financial advice offering.
This range includes accountants getting a limited or full licence, becoming an authorised representative of a licensee or entering into a referral arrangement with an appropriately licensed person.
A transition period from July 1, 2013 to July 1, 2016 has been allocated for the application process for a limited AFSL, but this is also subject to regulator review.
Be prepared and positive
Hugh Elvy, head of financial advisory services at The Institute of Chartered Accountants in Australia, is one of many who believes much can already be done in preparation for the new regulation, despite accountants awaiting government guidance and the regulator’s review of the licensing process.
The reforms potentially create an opportunity for thousands of small-practice accountants and financial advisers who wish to grow and diversify their businesses.
An MLC survey has found that 75 per cent of accountants want to deliver financial advice to clients under the proposed licensing regime.
The survey also found that of the accountants who wish to deliver financial advice, 67 per cent would like to do so in-house.
MLC surveyed more than 200 accountants during its recent Accountant Seminar Series held around Australia. The seminars were designed to help accountants who advise on self-managed super funds (SMSFs) navigate the changing legislative environment.
Nick Hilton (right), national manager MLC accountant solutions, believes 5 to 10 per cent of the oft-cited 10,000 accountants will make a full transition to becoming financial planners as the reforms “level the playing field”.
“We believe the legislative changes will provide an opportunity for accountants to grow and diversify their business, and our survey shows that nearly two thirds of accountants agree the licensing changes are positive,” he says.
Early adopters
“There is a clear opportunity for accountants and financial planners to work together to help bring advice to more Australians, so it is heartening to discover that 75 per cent of accountants are positive about their business’ future in the wake of this legislation.”
However, Hilton expects a wait-and-see approach over the transition period, with a few early adopters moving across to the limited AFSL in 2013 and the majority waiting until 2016.
He added that it was too soon to comment on whether existing financial-planning dealer groups were actively targeting accountants.
Can Hugh or anyone please explain how this is a good opportunity for adviser?
Having thousands of new competitors come into our business doesn’t to me in anyway present as a positive.