There is a danger self managed super fund (SMSF) trustees will miss out on important financial advice if accountants continue to delay decisions their post-July 2016 licensing.
“A lot of them haven’t yet made the decision on whether to go down the path of a license or a limited license,” says Peter Burgess, head of policy, technical and education services, AMP SMSF.
Figures from the Australian Securities and Investments Commission (ASIC) show that only around 100 applications have been received so far. The regulator forecasts it will receive around 10,000 applications for the license by the deadline.
“We’re likely to see a bit of a rush next year, and that’s not ideal because this could be quite disruptive to the industry,” Burgess says.
He doesn’t believe there is any single cause of this, dismissing suggestions this could be a result of an overly stringent application process on the part of ASIC.
“From where I sit, the requirements don’t seem to be unreasonable. So it’s just a matter of accountants that are yet to put their applications in. I don’t know what else can be done. There’s quite a bit of information out there about the need to move to this new licensing regime.
“I think they’re getting tired of hearing it…but they need to get a wriggle on, that’s for sure,” Burgess says.
He suggests some are underestimating the time it takes to address the various requirements, including RG146 qualifications, and compliance burden leaving it to the last minute
“Our message is that it is going to take longer, perhaps, than they expect. It’s a whole new world for some accountants.”
Burgess says it still remains unclear how many accountants will pursue the option of a limited license versus a full license, partnership with a full Australian Financial Services licensee or abandoning SMSF services altogether.
“It’s very, very hard to tell. There’s obviously advantages either way and they have to sit down and work out what’s best for them and their practice.”
According to Natasha Fenech, managing director, AMP SMSF, around 75 per cent of its SMSF customers currently receive financial advice, though it’s unclear what the industry average is for SMSF advice.
She says advisers play a variety of roles, including investment advice, helping the client structure their portfolio and select appropriate products. “We also support administration of the fund, if they decide to use our services.”
“If you’re an accountant, staying abreast of all that, and doing all that work, they can tend to lose money doing this.
“Utilising services such as ours, we’ve got a whole team of technical experts that are ensuring our systems and practices in our business are meeting legal requirements. It’s a strategy around reducing their own real costs and giving them more time back in their business, and also de-risking their business,” Fenech says.
Fenech also addresses concerns that have been raised in the broader community about vertical integration among large financial institutions.
“There’s a view that, because we’re AMP, we’re going to cross-sell our products into accountants or advisers’ books. We actually go to great lengths to ensure that doesn’t happen unless the adviser’s specifically given us permission to do so,” she says.
