DBA Lawyers director Bryce Figot says many of the accountants he speaks to have entered the licensing regime, but they avoid providing advice services and SOAs at all costs because they are struggling to sell those services to clients.
“I’ve spoken to a significant number of accountants who are licensed and aren’t very keen on doing statements of advice because they feel their client won’t value the extra value that the statements of advice gives them,” Mr Figot said.
In a poll run in an online seminar by DBA Lawyers, 31 per cent of accountants said they were an authorised representative but tried to avoid providing advice services under a licence.
“A number of accountants have said to me that they’ve got the licence but they think it’s going to be a hard-sell to clients to charge for a statement of advice,” Mr Figot said.
“It’s very similar to people holding nuclear weapons … they have them, but they don’t actually want to ever use them.”
Mr Figot said these accountants are instead choosing to provide factual information or only acting on execution-only basis.
While these strategies may work for the simpler aspects of superannuation, he said it can become risky when accountants service clients this way for complex advice needs.
It is a fairly common practice for accountants who don’t want to provide a statement of advice to simply provide a template for an investment strategy, which Mr Figot said can be risky.
“One of the things that investment strategies are legally required to consider is the question of insurance. What if a client starts an SMSF and you give them a template investment strategy that says something like consider insurance … that’s where I think it really starts to get more into the realm of advice,” he said.
“Particularly something like insurance because god help you if someone actually does pass away or is injured in a way that insurance would have been triggered.”
wow ….no surprises here….accountants now realise why WE have had to charge for documenting advice
Regardless of what the law might say, ASIC senior management has been pretty clear that accountants have an exemption under the “right sort of chap” rule.
Maybe touch base with Alex Malley at CPA Advice – he’s got all the SOA templates ready to go…..
This is the fantasy about accountants being a source of advice. They want it all one way. They actively encourage people to do things and then pretend it was a client directed transaction. They should have been pulled into years ago. ASIC is again proving reluctant to act when alerted to trouble. Far easier to stick to the safe popular ground of blaming banks, planners and mortgage brokers rather than acting on tricky issues regarding product providers or accountants.
Curious, If a financial planner is guilty of giving advice which is not supported by the requirement of a disclosure document (SOA) they are rightfully the focus of a ban by ASIC from the industry. I fully understand some Accountants are doing the right thing however those who continue to give advice with or without a license and don’t issue a supporting SOA should be named shammed and banned by ASIC.
I am feeling this is a con we have paid $ for a SOA and it hasn’t told us anything that we didn’t know and this was 12 months ago, being told and shoved down our throats. Is this law and we have to have or is it our choice? We have been managing our smsf since the 80’s.
Ron, you can thank the lawyers and the lawmakers. I have been dealing with many of the same clients as a life insurance adviser since the 80’s. No prize for guessing how those clients feel.
It’s only law to get an SoA if you’re getting advice. If you know everything already, why are you getting advice?
And you are surprised at this finding. Accountants should wake up to the fact that if they wish to play in the planning sandpit, they too must follow the rules and practices lest ASIC will have no trouble naming and shaming. Planning is not a right of way.
Well now maybe the accountants associations will realise the issues we have had for years and stop their headlong attempt to demonise and destroy our industry, many fin jam planning failures of the last were caused by just this sort of avoidance by accountants particularly in the forrestsry debacle, I wonder when is ASIC in this issue ?
What’s new. The furphy is that they are only providing factual advice…cough..cough. Pull the other one.
Who believes that execution only deals were not after wink wink nod nod verbals ?