The removal of accounting exemptions and the introduction of limited licensing has swayed a growing number of accountants, participating or specialising in the SMSF sector, to consider their licensing options.
Within three years from the 1st July 2013, accountants need to decide whether they will apply for a Limited AFS Licence or become an Authorised Representative of a Licensee in order to continue with their SMSF work.
With time of the essence, accountants must consider how the licensing option they choose will impact their business operations, as well as the underlying costs associated with each of these options.
Up until now, I feel accountants have only been getting half the story – they have seen the initial costs of securing a licence, but there has been little discussion of what is required to maintain it.
The initial application costs of obtaining an AFSL can be minor, which makes it appear to be an attractive ‘easy’ option. However it is estimated that the monetary cost of maintaining a licence is well over $30,000 per annum.
This figure includes the cost of ongoing training, technical support, costs incurred from compliance and other service providers.
But more importantly, it includes the potential costs of lost revenue in time spent undertaking related administration and keeping up to date with all financial services regulation. Depending on workload, this can be 1 to 2 hours a week spent liaising with backend service providers, representing about 100 hours annually.
As the industry moves through the transitional licensing period, it is imperative that accountants investigate their options for being able to continue to service – and attract – clients requiring SMSF advice.
Becoming an Authorised Representative of a Licensee should be attractive to many accountants as it eliminates considerable risk and cost from their business model, transferring it to the Licensee. This includes the costs of maintaining an AFSL, compliance, research, technical support, fiduciary duties and legal requirements.
An experienced Licensee group will typically offer a range of licensing options to fit most business models. This may include options for an entry level authority which allows you to open and close SMSFs, or an authority to give strategic and/or comprehensive SMSF advice. These options will come with various levels of services and support. Costs will range accordingly but it is likely that it will be far more cost effective and lower than obtaining and maintaining your own limited licence.
The Licensee that I manage has been created specifically for accountants who provide market leading services. We understand the in-depth detail of accountancy advice requirements. Our accountancy designed value proposition will assist your business to grow exponentially in this exciting sector.
