As the industry moves into the transitional licensing period, it is important that accountants look to the future. They should consider how they can turn their advantage of being the most trusted financial professional into revenue growth.
Considering the position that accountants enjoy among Australia’s investment client base, and a growing $505 billion asset base of Australian superannuation, the question of licensing is one of how and not when.
To help guide the decision, there are some key questions that accountants can ask themselves:
- How can I best position my business to gain a share of the $505 billion SMSF asset pool and how much am I losing in revenue by not being active?
- Can my current business model sustain growth?
What options are there?
The transitional period means that there are a number of licensing options from this year until June 2016 available to accountants in terms of how to position their business now and into the future. They are:
- Obtain and maintain a limited of full Australian Financial Services Licence (AFSL).
- Become, or recruit, an authorised representative of an AFSL holder.
- Focus on referral relationships and partner an authorised financial planner.
- Do nothing and step back from providing SMSF advice.
What should accountants do now?
When faced with many licensing choices and new regulations, it is tempting to choose the option that may ‘tick the box’ immediately.
Choosing between fast and smart is not easy; not choosing any option at all is certainly not smart.
Surprisingly, there are a significant percentage of partners we have talked to who are not actively considering their options and will choose to conduct ‘business as usual’.
It will be risky to continue to give SMSF advice without being licensed. ASIC has communicated that they will take regulatory action against unlicensed operators and state in ASIC Report 337 that ‘we do not want to see SMSFs become the vehicle of choice for unscrupulous operators’ (page 55).
There are a number of reasons why becoming licensed or authorised now will benefit your business:
- Establish your practice as a market leader.
- Capitalise on market trends – clients are driving accountants to offer further advice and become a ‘one-stop- shop’ advisory service.
- Benefit from immediate revenue gains from expanding your strategic advice services.
- Increase the succession value of your business.
- Attract and retain younger staff and adapt to generational change.
Our analysis shows that, when you factor in the training requirements, application processes and preparation, it may take as long as two years to be fully operational if the limited license is the chosen option. The same analysis demonstrates that businesses making the decision to obtain an authority of an AFSL holder would be fully operational well before that and well before the licensing deadline.
Either way, the smart thing to do is act now.
As Head of SMSF Advice Limited, Stuart Abley brings a strong knowledge of the financial planning and accounting industries and how they can work together effectively.
