An MLC survey has revealed that three-quarters of accountants want to provide financial advice under the new licensing regime, but the group says there is still a clear opportunity for advisers and accountants to work together.
The survey was conducted at a recent MLC Accountant Seminar Series, where the focus was on new licensing opportunities for accountants following the removal of the ‘accountants’ exemption’.
The proposed licensing regime, announced by Minister Bill Shorten as a way to support accountants who supply advice to self-managed super fund trustees, would grant licensees the ability to provide ‘class of product’ advice to clients under a restricted Australian Financial Services License (AFSL). Alternatively, said Nick Hilton, National Manager MLC Accountant Solutions, accountants who want to advise SMSF trustees under the new regime could:
- Obtain their own full AFSL
- Become an authorised representative of a licensee
- Enter into a referral arrangement with an appropriately licensed person
Speaking to riskinfo after the series, Mr Hilton said that accountants are not interested in providing advice on specific financial product solutions, and are more focused on delivering strategic advice around structuring, thereby providing an opportunity for advisers to get involved in implementing that advice.
… accountants are not interested in providing advice on specific financial product solutions
“The advice provided by the accountant is more likely to be a structuring conversation, around the benefits of using a self-managed super fund over holding investments elsewhere,” Mr Hilton said. “Then the planner comes in and helps the client determine where the money is going to go within that SMSF, or, if insurance needs to be held inside the fund, which company to take out a policy with.”
“In a lot of instances the conversations we’re having with accountants are suggesting that they don’t actually want to provide those specific product recommendations,” he added.
Asked about the impact of the Accounting Professional and Ethical Standards Board guidelines on the provision of financial advice by accountants (APES 230), which proposes a ban on commissions for all financial advice including insurance, Mr Hilton said it was not ‘front of mind’ among attendees at the events. He also highlighted that the guidelines were “very much in draft form” and that while he believed the current wording would have an impact on revenue sharing between someone who receives commission on insurance and then shares that with an accountant, there was… “not enough information to actually make a call on that”.
I don’t think APES 230 will have an impact at all
“I think if you look at the whole concept of strategic advice, and certainly our licensing solutions, and the way that the SMSF (self-managed super fund) market and the advice provided by accountants operates, I don’t think APES 230 will have an impact at all,” Mr Hilton said.
“It’s only perhaps where they (accountants) refer work on to a financial planner for the product execution and there’s a revenue sharing arrangement in place where that would be an issue. But the way accountants operate is very much a fee-for-service basis on hourly rates, so it’s all within the APES 230 guidelines.”
“There is a clear opportunity for accountants and financial planners to work together to help bring advice to more Australians so it is heartening to discover that 75% of accountants are positive about their businesses’ future in the wake of this legislation,” he reiterated.
The advantages of working with accountants flows to every interested party.
What accountants will need to understand and they are one profession that probably would,is the disaster of blind enthusiasm with little knowledge that their clients get themselves into, when they set up Businesses with little practical experiance and who then struggle with the complexity and huge expense, risks and long working hours,only to find that they would have been better to focus on what they did best.
Many accountants may find out the hard way that forming relationships with experts who will provide expert advise, is more profitable and preferable than going it alone and potentially jeopardizing their client relationship by giving inferior advise.
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