Accounting partners are well aware of the Future of Financial Advice (FOFA) legislative changes related to offering advice on self-managed super funds (SMSFs) and the removal of the accountant’s exemption which allowed them to provide advice on setting up SMSFs without the need for an Australian Financial Services Licence (AFSL).
Those that want to continue servicing their clients with SMSF advice, or build strength in this growing sector, are now faced with making decisions on the best way forward.
Over the past 12 months we have talked to over 500 accountants across Australia – many of them business owners of two to six partner firms and members of the three accounting associations – all with different opinions and approaches to the changing landscape of their industry.
Through our conversations with accountants, we’ve noticed there are three mindsets in the current market:
- Those who see the opportunities but aren’t sure how to make it work in their business.
- Those who are putting the decision of licensing off thinking they have enough time to consider their options without knowing the time required to get prepared
- The early adopters whose business models are already changing to take advantage of the legislative change.
The choice between becoming self-licensed or an authorised representative of a licensee is an important decision and many accountants are bewildered by these options.
While most partners are predominantly concerned with the cost implications of change, some are limiting their focus on application fees to obtain a licence rather than reviewing the totality of the costs of operating under and maintaining a licence.
Many are also neglecting to explore the non-financial criteria that play a critical role in determining the best option for the business. This includes:
- The type of SMSF advice they want to offer their clients;
- The time investment needed to maintain a licence;
- The complexity level of getting their SMSF advice capability up and running in their business; and
- The opportunity cost of waiting until June 2016 or worse still, doing nothing at all.
There is no question that accountants will benefit from expanding the advice side of their business. In fact, the legislative change should be seen as a positive catalyst to thoroughly assess the long-term growth strategy and succession plan of the business and, accordingly, adjust the business plan.
Whatever decision is made, knowing the implications on your business – the real cost of licensing – is crucial. It is a decision that must be addressed to ensure the business continues to remain relevant, a participant in the changed marketplace and meeting the expectations of your clients.
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.
