The chief executive officer of Count Financial, David Lane, has urged accountants seeking a solution to the end of the licensing exemption to act soon or face running into a June 2016 logjam.
Lane says there will be many thousands of accountants seeking a licensing solution between now and 2016. He said it typically takes three to six months for a firm to prepare properly and move to an Australian Financial Services Licence (AFSL) regime, and if firms leave it too late they will potentially encounter a significant licensee capacity constraints, and miss the July 1 deadline.
Lane said the issue will be most pronounced for those accountants who choose the limited authorisation route.
“You can do it relatively quickly if you’re focused,” Lane says.
“There’s always an opportunity cost to cover. But we typically find three to six months is how long it takes people to go through their training currently. And there’s less training if you want to do a limited authorisation.
“What’s going to be fascinating is going to be in June 2016, are we going to have 5000 people who come to all of the licensees and say, ‘We’re ready now’, and all the licensees look around and say, ‘Great, but we only have capacity in this month to take on a thousand people’. I think that’s going to be very, very interesting. I think there are going to be capacity constraints – on the limited authorisation.”
Lane says Count’s experience to date is that accountants start out seeking a limited authorisation, but once they see the work involved in that and the relatively small additional amount needed to gain the flexibility of a full authorisation, they opt for the latter.
July 2016 a non-event
“If you want a full authorisation, July 1 2016 is a non-event, because you can get it whenever you want and if you think it’s a good business proposition you should do it earlier rather than later. But that is not going to take away from that interesting industry dynamic in June 2016.”
Lane says Count is “going though an exercise of working out how we handle that capacity and get people to sign up early, because there will be disappointed people”.
“The best thing we can do for them is say, this is the process, recognise the capacity constraints, and if you get in early you will be guaranteed a spot.”
Lane says Count will be selective in the accounting firms it takes on. It currently has just shy of 600 representatives, down from a peak of about 1100, and could comfortably again support a figure closer to that peak.
“Among other things, we have a numbers approach that says when you come in you have to have X amount of revenue and X amount of people working for you, et cetera, as a starting point; but we do a second interview which is effectively a cultural fit interview, which talks about what are your goals, and how do you view clients, and let’s tell you about Count and let’s tell you about our culture, because we think that is very, very important.
Being picky
“So part of it is making sure we’re picky. The other part of it is, while I am happy to support the industry and its growth, what I do not want to do is ruin the culture [of Count] by waking up one day and where we started with 550 advisers we now have 10,000 or some ridiculous number, because you couldn’t manage that. Five thousand you couldn’t manage. Two thousand? You kind of back down – what’s the right number? I do not know the specific number. I do know at one point Count had 1100 ARs, and they were able to support that, so I think we have a reasonable amount of ability to grow, but what the number is depends on making sure we find the right type of members.”
In a White Paper published earlier this week Count said accountants had four choices under the new licensing regime: cease providing advice, including to self-managed super funds (SMSFs); develop a referral arrangement with an external financial planning firm; obtain a limited AFSL; or become an authorised representative of an existing AFSL.
Count’s offer is structured in two tiers:
Accountant Authorised Representative: A mid-level authorisation option for accountants that want to continue providing SMSF only advice once the accountants’ exemption is removed. This authorisation also allows the accountant to provide strategic insurance advice in relation to the establishment of an SMSF, enabling the accountant to provide advice that is in the best interests of the client by giving consideration to their insurance requirements.
Authorised Representative: Full authorisation status allowing accountants to provide comprehensive financial advice.
A copy of the White Paper, Financial Advice – The Growth Opportunity, is available here.
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