Accounting groups are still intent on growing their SMSF advice client books despite the regulatory challenges inherent in the limited license regime and the imposition of an education mandate ill-suited to their skillset, according to data from researcher Investment Trends.

According to senior analyst King Loong Choi, the firm’s 2020 SMSF Accountant Report shows that most accounting firms are still on the hunt for advice clients.

“Accountants already play an influential role in the SMSF space, with accounting firms serving 129 SMSF clients each, on average.” Choi said. “But given the choice, accountants would ideally like to grow their firm’s SMSF client base by 35 per cent from 129 to 174 clients.”

This willingness comes in the face of a number of factors, including a declination in the SMSF market overall. Growth in SMSFs is at a decade low, with the annual establishment of new SMSFs falling from a high of 40,000 in 2012 to only 20,000 in 2019.

Choi says the real challenge for accountants in growing their advice books, however, lies elsewhere.

“In their quest to serve more SMSF Trustees, accountants say their top challenges are regulatory in nature, ranging from licensing restrictions on providing financial advice (49 per cent say so), heightened regulation in setting up SMSFs (34 per cent) to compliance obligations (31 per cent).

“However, many accountants also face issues on the client-facing side, such as competitive pricing/fee recovery (38 per cent) and attracting new SMSF clients (29 per cent),” he said.

These issues come on top of a challenge that has seen vast numbers of accountants give up their limited license allowances; that is, an exam that tests on their knowledge in areas like regulation and ethics as they pertain to financial advice, not accounting.

The nation’s two main groups that provide limited licenses, Easton Investments and the National Tax Accountants Association, lost 30.3 per cent and 14.9 per cent of their adviser force respectively in the last year according to the latest Professional Planner Licensee List.

Choi says the accountants are looking past these challenges to see the potential in the market. While SMSF trustees account for an average pf 36 per cent of accountants’ client base, a further one in eight of their clients are suitable for an SMSF and half of this cohort have expressed an interest in setting one up, he says.

“Given the large pool of potential SMSFs, there is a clear opportunity for service providers to help accountants better serve this segment,” Choi added. “To help educate clients and facilitate SMSF set up, accountants want to be better equipped to explain the suitability of SMSFs (52 per cent), and the roles and responsibilities of Trustees (49 per cent).”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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