The accounting association has announced the results of PwC’s post-implementation review of CPA Australia Advice, which recommend the closure of the flagging advice division.
In a statement posted on its website, CPA Australia said it had decided to exit the advice business in light of PwC’s findings.
“Today CPA Australia Advice has provided notice of the decision to all of its existing authorised representatives and to staff,” said the statement.
“CPA Australia Advice will work with all authorised representatives to transition from the business before the end of the calendar year.”
The PwC report concluded that “demand from members for the CPA Australia Advice offering was insufficient to ensure its financial viability” and found “no evidence to suggest that future demand for the offering in its current form will increase to a financially viable level”.
“Taking into account the uncertainty created by the potential impacts of the Financial Adviser Standards and Ethics Authority (FASEA), increased regulation and costs, as well as potential outcomes from the financial services royal commission, the board will prudently consider how CPA Australia can be best equipped to support members in the provision of financial advice,” said the report.
The death of CPA Advice isn’t a surprise. Many accountancy practices rely heavily on commissions from insurance sales. When they are involved in financial products, often their advice/ referral fee is percentage based on FUM. Whilst both of these remuneration models were not supported by CPA Advice (hence, the ASIC support), they are widely used in the rest of the financial planning industry. My take is that ‘when it is all set and done’, accountants giving financial advice wanted the same remuneration model options as everyone else in the financial planning industry.
The bottom line is that neither ASIC nor the self promoting clown heading CPA new anything about the advice industry and used other peoples money to set up a business model that was not commercially viable. ASIC are dangerous and risk bringing down commercially viable business in the pursuit of nevana that does not exist with absolutely no consequences to their salaried roles.
*Nirvana (being freedom from suffering, not the band)
This CPA business closing is one thing but what does the accountant of the future (or now) do when their tax return work is diminishsing each year and they need to be in “some form” of “advice”? What does an accountant do then??
Probably advises on property and take some nice cuts from developers.
bury their head in the sand, bad mouth financial advisers and keep going with a low margin almost defunct service line
The only Financial Services group publicly supported by ASIC fails dramatically. Only in Australia!
This is a common sense move. I’m an accountant in a small practice. I can do whatever I want, whenever I want, how I want and have been doing so for years. So screw you all. So long as my clients pay the benchmark average rate of tax according to the ATO no one will ever query me and clients never ever complain about their accountant full stop. Good on CPA for getting rid of it.
I cannot see the need to be licensed for either investment advice and or SMSF advice and pay all these ridiculous fees and provide clients with all these useless consumer protection documents, dragged down to the level of cowboy advisers, that ultimately drive up prices for ordinary consumers. Many accountants feel the same as me and we’re all happy to run the gauntlet so it was always going to be a flop. For years I say to my clients they should set up a SMSF in a compulsory tax return meeting. Then strangely enough one day they come to me and say I want to set up a SMSF and I say it’s you’re choice not mine. Too easy.
And ASIC still can’t find any of these accountants who never understood the limits of the old SMSF exemptions and regardless if they did always said stuff ASIC / AFSL compliance I’ll do whatever I want.
And clearly plenty of accountants still doing the same thing.
Living the dream – one day when something screws up and you get taken to AFCA and have zero professional indemnity. I hope
Your own asset protection strategy is well set up.
unfortunately, I think many will miss the sarcasm with which this was written
Yes Jimmy…. but the underlying message is true.
Maybe sarcastically written Jimmy but unfortunately way too often, dead true
And Alex Malley is where ?????……………
he lives in woolwich one of the most expensive suburbs in Sydney, enjoying his more than $11m property portfolio built on the back of sucker’s at cpa members who are struggling themselves to make ends meet while he gets a pay out of nearly $5m
cpa’s sucked in punching out tax return for low margin ha ha nice one
same thing is happenning with the FPA members though
wow, no comments on this one! weren’t CPA the shinning knights that were going to fix the industry from all those bad conflicted financial planners? oh our business model does work…. thanks for the disruption CPA
Well, that certainly did revolutionise financial advice…
Cpa australia.is a.joke…
Wonder what the business plan looked like?
Are ASIC going to be part of the failure announcement and publicity.
And how about an admission from ASIC of how wrong they were supporting and promoting this failed CPA AFSL expensive failed business.
I vividly remember the arrogance of Greg Medcraft and Alex Malley as they made snide remarks towards financial planners when they launched this failed venture. Their ignorance was as obvious as it was astonishing for those of us in the profession. I hope ASIC & the CPA learns from this experience. If they engage with us properly, they will discover the vast majority of us are honest, caring, dedicated people who are passionate about our profession. There is a great deal ASIC and accountants could learn from us. If we work together, we could achieve many great things to improve financial outcomes for the Australian public.
Proving that a business model on giving advice for free will blow up !
Will these poor bastards be treated by ASIC in the manner the Dover advisers were when the owners closed down that AFSL. Of course not – this AFSL was favoured and endorsed by Medcraft
Like every big company with an informed management team who fully understands the financial planning industry they have woken up and realised the industry is doomed, you cant do business and be compliant and to be fully compliant is impossible without a huge cost to everyone. Why on earth would you think you can navigate this ridicuous industry and win. Obviously they cant see it nor can the banks. But you know better right? LOL.
Keep paying those FPA memberships people, the smiling assassins have destroyed your business while trying to boost theirs.
Funny , No mention of the millions it lost in set up fees and paying the CEO the big bucks ………
CPA executives off on their own tangent, ignoring their members views………. hmm sounds allot like FPA.
Was always bound to happen. Hopefully the Royal Commission into auper focuses on accountants setting up unneccessary and costly SMSFs and leaving them invested in cash.
ouch!! that cost a few bucks
I wonder if the CPA will compensate those members who paid hard money to be licensed and where will they go?
NTAA
Geez, we’re in a hell of a mess if the accountants can’t even save us!
Bahahaha! That is all