The SMSF Association will be working with professional accounting bodies and the Financial Planning Association to press policy makers for a rethink of the advice framework that separates strategic advice from product advice, the association’s CEO John Maroney told attendees at a breakfast before the opening of the group’s annual conference on the Gold Coast.
Maroney highlighted that the accounting profession’s limited licensing carve out “hasn’t worked very well” because clients who seek advice don’t want to be limited by regulation in terms of the advice they receive by their trusted professional.
“We should have the ability for strategic advice [to be given by] highly qualified, highly ethical and highly competent people, but that shouldn’t have to be done through the whole rigmarole of SOAs [statements of advice],” Moroney said on a panel discussion during a BT thought leadership breakfast alongside Rice Warner’s Michael Rice, Investment Trend’s Michael Blomfield and Challenger’s Jeremy Cooper.
“The whole framework has to change and I believe that, and more and more voices are supporting that,” Maroney said. He added that the SMSF industry’s peak body had coordinated a lobbying effort with the three accounting bodies and the FPA for a rethink of the advice policy framework to separate strategic from product advice.
Maroney confirmed with Professional Planner he is working with representatives of the three accounting bodies – Chartered Accountants of Australia, Institute of Chartered Accountants and the Institute of Public Accountants – for an acknowledgement that strategic advice falls outside the definition of general and product advice, and to have it recognised by lawmakers.
“We are trying to get recognition that the current system is broken, that it doesn’t work. It’s not accessible and not affordable,” he said.
“I think until we get recognition that the current system isn’t working for most Australians and that something better needs to be put in place, it won’t be possible to move down the path of how to do it,” he said.
Policy head space
Maroney’s comments also highlighted the challenges associated with getting policy makers to stand back and look at the whole advice framework at a time when Treasury is busy implementing Hayne’s royal commission recommendations.
“That actually does require work with government, with regulators, and that’s going to take time because we are still in the process of implementing reforms that have taken the last 5 years to arrive at, with FASEA, with higher education and ethical standards,” he noted.
“I don’t have the solution to roll out today, we are working with other groups on that,” Maroney added.
Senator Jane Hume, the minister for superannuation, financial services and financial technology, spoke during the opening session of the conference on Wednesday; during her speech Hume referenced the time Maroney and representatives of the SMSF Association have spent with her and the Morrison government’s staff discussing policy in this area.
“There probably needs to be an introduction of a different form of financial advice, different to advice that focuses around products,” Maroney said. “We think the world has changed from the idea of financial advice as product advice, that’s a 20 year old idea.”
“Look at other sectors in society, we don’t keep rehashing out 20 year old paradigms about what advice means, what cars you drive, what internet you use; so I think a recognition there is a real role for strategic advice separate from product advice, that need to be clearly defined what that means,” he said.