With time now fast approaching for the July 1st deadline whereby the accountants SMSF Advice exemption will be removed, the big winners will be qualified compliant ready Financial Planners in contrast to a great number of accountants that simply will not be ready or able to transform their practices to capitalise on the business opportunity said industry consultant John Wiseman.
“Far too many members of the accounting profession, especially the public practice accountants are simply not moving fast enough with many practitioners in denial or unable to comprehend the enormity of the administration, operational, legislative and regulatory demands of a full or partial AFSL requirements to provide SMSF advice to clients”, said John Wiseman.
“In contrast, the advice sector is well positioned to capitalise with financial planners who are ready, qualified and SMSF compliant the potential winners after July 1st and will be the beneficiaries of new business growth by positioning and promoting themselves accordingly”.
When the SMSF provisions were first announced, John Wiseman predicted the financial planner / accountant SMSF scenario outcome and after attending many industry seminars, workshops including most recently the 2016 SMSF Association National Conference in Adelaide – it has only reaffirmed this position.
SMSF Trustees / Members have several reasons for setting up their own fund with control of one’s own financial journey and destiny a key motivation and objective amongst many.
“A further prediction is that if many of these individuals that undertook their own SMSF was the reduction of costs – especially fees, then they are going to be in for a real shock post July 1”, said John Wiseman.
Some accountants may be able to keep client SMSF costs down. Others may think that they will be able to charge at the current rate and perhaps they may succeed in the short-term, but not many affirmed John Wiseman.
“I see fees as a major stumbling block for many accountants as well as an extreme lack of understanding of what they are in for post July 1 and the legal demands required to undertake the provision of professional licensed or partially licensed advice in this new era”.
Another cost John Wiseman foresees impacting SMSF Trustees and Members will be increased audit fees as the result of the ATO cracking down on cheap audits whilst encouraging auditors to substantially increase their productivity and a more rigorous adherence to independency requirements.
A further driver of costs will be the ATO higher entry levels and requirements for new SMSF auditors that includes much tougher exams and industry experience of 300 hours before being able to operate alone as an auditor. These will surely reduce numbers and drive up charges and fees especially in the draw down / pension stage.
Already the confusion within the ranks of accountants over advice has been evidenced by the appalling low number of AFSLs sought (204 at the end of November 2015 according to ASIC) and is it any wonder said John Wiseman with over 26 different licences available requiring various levels of training and appropriate competencies.
John Wiseman is adamant that many Trustees / Members will be paying significantly more for their Self Managed Super Funds to be managed from July 1 except where they are administered through a current compliant advice process and framework with supporting SOA’s, ROA’, diary notes, etc.
When those accountants that have been procrastinating, unable or unwilling to make a decision finally take action, they will encounter a bewildering and overwhelming appreciation and realisation for the full depth of the commitment required to even provide the lowest level of advice.
Furthermore, they will be well advised to engage in a comprehensive dialogue with their PI insurer who will want to know in precise detail their advice provision activities.
John Wiseman concluded, “A very real alternative and option that those accountants that have not yet undertaken the acquisition of their AFSL may be to re-engineer their business model and establish a JV or advice alliance with a financial planner resulting in a win-win-win outcome for the accountant, his / her clients and the financial planner”.
Source: John Wiseman Consulting
