Conflict-free AFSL licensing option for accountants


By

April 20, 2015

Determined to bring a “no strings” offering to the market, independent national advisor, Royston Capital is now providing small accountant groups across Australia the option of a non-aligned Australian Financial Services licence.

This is in direct response to Future of Financial Advice (FoFA) reforms which will require accountants (looking to provide SMSF advice) to be licensed as of 1 July 2016

Currently the main options available to practitioners are to obtain their own limited licence from ASIC or licencing via a bank or financial institution.

Says Royston Capital proprietor, Chris Boag: “What we are doing is presenting accountants with another choice, targeting those wanting to provide quality advice free from conflict of interest – in essence businesses looking for a solution that will set them apart from the crowd but without the burdens of their own limited AFSL or being beholden to large scale institutions.”

Licencing under the Royston Capital banner will allow practitioners to provide SMSF financial advice and advice on ‘class of product’ with regards superannuation offerings, securities, simple managed investment schemes as defined in the Corporations Regulations 2001, general and life insurance and basic deposit products.

“The offering is also geared at ensuring practitioners seamlessly transition to the new legislative environment, allowing them to focus on their core activities without unnecessary distractions,” says Mr Boag.

“We are well aware that accountants will be overwhelmed by the new obligations that govern the provision of advice – even where it involves the simplest limited advice. So rather than simply providing our licensees with ‘the tools’ to help themselves, our approach is to create a close working relationship with them, helping them every step of the way – from that initial discussion with their clients right through to implementation of that advice.

He says his licensing solution will also address recent key concerns raised by ASIC commissioner, John Price: that SMSF advice is not sufficiently ‘tailored’ to client requirements and that there are key deficiencies in areas of replacement product and insurance recommendations, single asset class advice and recommendations around SMSF alternatives.

Says Mr Boag: “Mr Price’s message is clear: cookie-cutter advice simply won’t cut it.”

He urges accountants to act on the FOFA legislative requirements, saying failure to become licensed or make other suitable arrangements could result in businesses losing their SMSF tax and compliance work to institutions that focus on the SMSF market.

“This would not be a good outcome for accountants. It would not only damage a critical part of their business but could result in client disengagement with new advisers working to very different delivery schedules.”

However he cautions accountants to choose wisely when selecting a licensing provider.

“Don’t get hooked on the first presentation and glossy brochure; conduct your investigations fully. Ask questions such as: What will I get from my licensing provider? What can they do for me versus what tools they can provide to get me going? What are the additional costs associated with the provision of advice and client management such as drafting a statements of advice, software, reporting tools, training and conferences? Will I pass these costs on to my client or wear them?”

He says there appears to be a race by major banks and financial services businesses, trying to shore up as much licensing business as they can, with many cold calling accountants, trying to sell them their licensing option.

“For these players it is potentially big business as it opens the door to a greater distribution network for their products, and doubtless they will be seeking ways to encourage accountants to plug their investment platforms, managed funds and insurance products.

“Admittedly while being licenced by a major institution is the right choice for many accountants, it is not for everyone.”

He also urges accountants not to leave licensing decisions to the last minute. “Give yourself time to find the right solution and start integrating it into your processes ….certainly well before 1 July 2016.”


Cut & Paste conveys information received directly from the organisations concerned. Statements and releases published here have been selected for their relevance to the financial planning profession. They are generally unedited, and the views expressed do not necessarily reflect those of Professional Planner.


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