Limited licence leads to business model questions

Important questions remain about how a business model that includes a limited Australian Financial Services Licence would work, delegates at the SMSF Professionals’ Association of Australia conference have heard.

Elixir Consulting’s managing director, Sue Viskovic, told the conference that there is no clarity yet on how much it would cost to self-license for the limited licence. Depending on the number of authorised representatives in the group, however, it seems likely it would be between $5,000 and $10,000.

A full licence would cost around $10,000 or $15,000, with ongoing costs for each of roughly $10,000 to $15,000 per annum, she said.

There is also no clarity yet on what kind of professional indemnity insurance would be required, she added.

Acquiring a limited licence through a licensee seems to be the preferred option within the industry so far and Viskovic recommended finding a licensee who is focused on accounting services.

Clients expect that if they need to implement recommendations associated with self-managed super funds then they should be able to do that at the time the recommendation is made. This means it would be preferable either to have an in-house practitioner who can provide those services or a strong referral relationship, Viskovic said.

“With a lot of firms, it becomes very hard – once you wear two hats, it can be hard to maintain your focus on both [disciplines] and keep up with CPD requirements,” she said.

Usually it’s more effective when one person focuses on advice, although there are costs involved and the practicability will depend on the size of the firm, she added.

With the issue of scoped as opposed to full advice, a practitioner may originally come from an accounting-based relationship with a client in which they have information about their finances but not necessarily their aspirations and goals in the way that an adviser would have.

From then on, an adviser can decide with the client whether they would be best suited to scoped or to more comprehensive advice. The best interests duty, however, would still require the adviser to bring to a client’s attention relevant matters for their consideration.

The client can then decide for themselves if they want to pursue the matter, but it’s important to notify them because “they don’t know what they don’t know”, Viskovic said.

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