The boundaries of financial advice will be explored in a session at the SMSF Association National Conference next month in a bid to answer accountants’ questions about whether their current activities are likely to fall under the new limited Australian financial services licensing regime.
With the end of the accountants’ exemption on June 30, there remains considerable uncertainty among accountants over whether they need to apply for a limited Australian financial services licence (AFSL), or settle on some other solution that will enable them to continue to give advice on self-managed superannuation funds (SMSFs) after June 30.
A survey of SMSFA members ahead of next month’s conference has identified the main areas of concern for accountants (see table).
“A preconference session on the first day, ‘How far can I go without falling off a cliff?’ will focus in on these areas, and attempt to define the boundaries for these types of client conversations – what can you discuss before it steps over into the licenced advice zone?” says Liz Ward, head of education for the SMSFA.
“We asked delegates to list their top three can-I-or-can’t-I-without-a-licence concerns from a list. There are two standout areas that they are wondering about.
| Area of advice | Percentage of accountants concerned |
| End of year tax planning and contributions advice | 80 per cent |
| SMSF establishment | 63 per cent |
| Property structuring options | 37 per cent |
| Establishing a pension | 75 per cent |
| Winding up an SMSF | 51 per cent |
| Binding death benefit nominations | 57 per cent |
| End of year compliance review | 35 per cent |
| Source: SMSF Association |
“It might be an indicator that [people are saying] I do intend to keep doing what I’m doing, but only up to this point, and I need to know what that point is.”
Ward says the association believes “there is confusion about what is inside and outside of licensing, and what is that line” and this may be contributing to a slow take-up by accountants of licensing solutions under the new regime after June 30.
“We ran a session about eight weeks ago where we talked about ‘inside and outside licensing’ and what’s the boundary, and the questions that were coming through from participants were very much about, ‘Where’s the line?’.
“So I think they know they may need [to do] something, but they are also conscious that they might be able to tailor their services so they continue to work up to that boundary, perhaps.”
Ward says it can be confusing trying to define where advice begins.
“It depends on the different transactions,” she says.
“At the end of the day … the ultimate test of financial advice is the individual, and whether or not they believe that their personal needs and objectives have been taken into account. So it’s very much not a black-and-white line.”
Ward says there are “two distinct mindsets” among accountants facing the June 30 deadline.
“One is, it’s inevitable, so we need to do it so we’ve done it; we’re jumping on board and we’re not going limited [licence] we’re going the whole hog, because that’s where we believe we need to go, so we night as well bite the bullet now and do it,” she says.
“Then there’s another group of people saying, well, I’m just going to see how it goes; I’m just going to really see what my business needs before I make that [decision]. I’ll find alternatives, which isn’t signing up to a licensing agreement or an ASIC [licensing] application.”
