The chorus of voices arguing for accountants to provide financial advice continues to swell, with Chartered Accountants ANZ, the Institute of Financial Professionals Australia (IFPA), and the SMSF Association all using their pre-budget submissions to highlight the topic.
At the crux of the argument for proponents of expanding accountants’ scope is that they would help fill the advice gap.
As CA ANZ put it, an ageing population means it is “critical that individuals can navigate their retirement puzzle easily and simply”.
“Expert financial advice is necessary for all Australians to work through the superannuation, taxation, age pension and aged care regulatory maze. To enable this, legal complexities and inconsistencies need to be removed,” its submission said.
“Australia needs more financial advisers, and this is unlikely to change quickly enough even allowing for the government’s Delivering Better Financial Outcomes announcements.”
That’s where accountants come in, according to CA ANZ.
“Our members are highly trained and skilled and can assist, but the regulatory environment needs urgent reform to allow our members in public practice to assist their clients with their everyday financial challenges,” it said.
“These reforms can be combined with the current review of financial adviser education standards.”
Similarly, the IFPA said that the way the financial advice system is currently constructed is “not fit for purpose”, leaving super fund members and self-managed super fund (SMSF) trustees cut off from accessing “good financial advice when they need it”.
Acknowledging that the government’s response to the Quality of Advice Review (QAR) was a “step in the right direction” for financial advice, the IFPA echoed sentiments the SMSF Association had previously shared in failing to address the role accountants can play in providing advice.
“As trusted, qualified and experienced professionals, accountants play a vital role in assisting their clients with their financial arrangements,” the IFPA said.
“We would like to see qualified accountants fill the advice gap in some way, particularly if employees of banks, superannuation funds and insurance companies will be given the opportunity to provide advice to their members.
“Accountants have the expertise and are just as competent as other providers to give advice to their clients.”
Crucially, the IFPA said its members are not looking to provide the full scope of financial advice offered by relevant providers, specifically noting that it is “not requesting an exemption for accountants to offer financial product advice in relation to the underlying assets within a superannuation fund”.
“Providing product and investment advice remains the responsibility of a licensed relevant provider,” it said.
“Rather, our members want to provide strategic and structural superannuation advice to their clients relating to their tax affairs. Examples of common superannuation related advice services include the ability to make contributions, commence a pension, establish and assist with the process to operation of an SMSF, winding up an SMSF, etc.
“If accountants are granted an exemption to provide strategic and structural advice, we believe financial advisers should also have the same exemption in those situations. In other words, if this type of advice is not classified as ‘financial product advice, then both accountants and financial advisers should follow the same rules regarding the need for a statement of advice (SOA) or record of advice (ROA).”
The SMSF Association, meanwhile, pointed to the 2019 James review’s recommendation that the government “initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to”.
This recommendation was “largely ignored” by the QAR, the SMSF Association added, leaving accountants searching for clarity.
“Advice in relation to SMSFs is not only about establishing an SMSF, it is being able to advise a client not to establish one or when to exit where an SMSF is not appropriate. These types of advice all constitute financial product advice. An SMSF is not suitable for everyone, and we have a severe advice gap in the market,” the submission stated.
“Financial advisers are reporting that they are at capacity, and accountants are reporting that clients who urgently need financial advice are unable to access that advice.”
Furthermore, the submission stated that the proposals for tranche two of the QAR reforms would see the introduction of a new class of adviser for the large Australian Prudential Regulation Authority superannuation funds.
“Their stated role is to address the advice gap for the many unadvised Australians. We support these reforms in principle, and they are urgently needed. However, this is creating a significant gap for middle Australians who have sought to take control of their financial wellbeing,” it added.
“Critically, we do not support the return of the former accountants’ exemption. What we do support is legislative certainty on what is defined as a tax agent service, and exploring the role accountants can play regarding financial literacy, education and nudges.”
Appearing on The ifa Show in December, shadow financial services minister Luke Howarth supported calls for accountants to be able to provide some form of financial advice to help fill the gap in advice accessibility.
“At the end of the day, I respect accountants significantly,” he said.
“My experience with accountants is they’ve provided good advice. They’re often people that you go to if you want to look at setting up a self-managed super fund and they’re qualified people that know tax law inside out.
“So, giving a little bit of advice, I don’t fear that at all from accountants and I think it probably should be looked at.”
The shadow minister added that there needs to be more collaboration between the professions.
“Financial advisers shouldn’t fear accountants. Accountants are good people, they’re well qualified and we actually want to try to get more people into financial advice as well,” Howarth said.
“There’s plenty of work for them at the moment. We want to reduce their regulations so let’s work together.”
I find accountants giving unqualified, no Soa,, under-cover advice all the time. No questions asked by ASIC.
There are some great accountants and great financial planners – I am one 140 accountants that hold a limited licence. The system disadvantages those who try to follow the rules . The ASIC fees are making it uncommercial to operate in this space for the benefit that I can offer. SMSF accountants operate in a limited space and provide a service to those who need ongoing strategic advice about SMSF and retirement. They often don’t want full financial service advice . The problem is the over-regulation, fees, and many unlicensed advice providers in the space, which means the limited licence platform is broken and many provide SMSF advice with out implementing a SOA . It is disappointing that I have invested in a model in terms of $$$ and training, and its future appears very uncertain.
I’m not sure if this is lazy journalism or the author was afraid to question the motives and actions of those quoted? It wasn’t largely ignored (Accountants providing advice) it was addressed specifically by Michelle Levy that is was inappropriate. View here: https://www.smsfadviser.com/news/21421-michelle-levy-flags-concerns-about-accountants-advice-proposal
Additionally, history and the csolr show that inappropriate smsf advice is horrible for some Australians, coupled with the disaster the previous accountant’s exemption and smsf only afsl were. Stick to you lane or upskill and meet the requirements to be an adviser.
This is also the exact same submission from the same bodies in September 2022 by the way refer to this link from Treasury. Why possibly entertain it? Either bias or vested interests. https://treasury.gov.au/sites/default/files/2022-10/c2022-307409-caanz-ipa-smsfa.pdf
Will accountants be willing to pay say, 20% of their FP income to a fat-cat AFSL?
Accountants have and will continue to provide advice under their so call “execution only” way of recommending SMSF and gearing strategies etc. Their clients are stupid by not asking for them to put all in writing so they can review or obtain a second opinion. If they did, most would not go ahead with their advice, sorry execution only advice I would suggest. Especially those that are told $50k is not enough for a SMAF or buy a rubbish apartment of the plan in a suburb where they will never get their money back on it.
Accountants who realise they made a mistake and want to be financial planners
what could go wrong
here is why it should never happen
new client
advised accountant they wanted to sell investment property in the following FY and contribute the money into super for there retirement.
the accountant agreed and advised there are tax benefits that can be utilised to reduce the CGT. So he asked the client for an update on there position. Client provided current income , property details and cash status and the account advised them to contribute to super up to the NCC limit for the current financial year. In the accountants eyes this would remove the interest from the clients position and assist with tax planning.
however the accountant never asked what the super balance was. They just assumed the client was battling and wouldnt have much in super.
in the new financial year client sold investment property, however due to the NCC the account balance is now higher then $500k, therefore no longer eligible to use unused concessional contributions.
when it was raised with the accountant his position was he wasnt a financial planner and that the client should have understood their position and implications of contributing into super.
There is nothing stopping accountants giving financial advice provided they follow the stupid rules and pay the exorbitant fees that financial planners have to follow and pay. They are seeking the ability to give unlicensed advice.
Qualified financial planners should be able to provide basic accounting and tax advice.
Under an afsl inline with the fasea code of ethics after completing the asic exam and FP specific creditentials, definitely
1. “Tax” is not a financial product
2. Superannuation is a tax structure
Simplistic, I know – is it more difficult than this however?
Just like industry funds giving advice what could possibly go wrong….
The model at the moment is broken. I’m an accountant and have in the past been a financial planner so I’ve seen it from both sides. There’s a few bad apples/poor performers in both camps but 98% of us strive to do the right thing by our clients. I couldn’t give fin planning the commitment it needed and the increasing compliance obligations and costs helped me decide to drop it. As an accountant with small and family business clients, everyday they’re looking for basic financial guidance and advice that I know that I’m skilled and knowledgeable enough to give. If it’s anything more than that then I’ll gladly refer it on to a planner
But will your peers who didn’t work I advice before? I’ve seen accountants overstep or outright verbally advise outcomes which provided devastating impacts to retirement missed significant opportunities and were plain self interested. Everyone advising should have to meet the same quals and experience no more bs and carve outs
Everyone needs a SMSF, right?
Sounds good to me… Financial advisers should also start helping clients complete simple tax returns, workout effective distribution of trust profits to the right beneficiaries and be able to do capital gains workings – all well within the capabilities of financial advisers. What could go wrong..?
or even access to the super contribution details on the portal.
Given the stricter code of ethics experience and education requirements all registered advisers I the retail space should immediately be able to provide all tax services accountants do.
All tax services from Accountants should be able to be completed with a licensed Financial Adviser. Its much simpler to go from Advice to Accounting than vice versa.
The flies are already descending on the corpse.
Back to the good old days when the automatic recommendation from accountants to their clients on income protection was for a two year benefit period because “if your sickness lasts for anything longer than 2 years, you will be dead”
Back to the good old days when everything was about tax deductions, not necessarily in the interests of the client, and the communication and explanations could be summed up with the words “trust me, I’m an accountant”.
Back to the good old days of an untrained back room operator in charge of providing comprehensive risk advice to someone who’s been told he needs insurance, and to go “out the back” and get it.I can see it all as if it were yesterday – roof plumbers classified as sheet metal workers to obtain income protection cover.
And finally back to the good old days of forestry investment schemes. After all they were tax deductible
These people cannot be allowed to provide financial advice, hiding under the umbrella of “simple advice”, without acquiring the qualifications that we currently hold.
They will probably achieve their goals because both options for government still do not understand advice
Accountants provide the WORST advice. Like pushing all those crap off the plan apartments for tax benefits. Please. They should be required to do all of the mandatory requirements advisers do
Provided they have jumped through all the hoops the rest of us have and continue to do – then sure. Otherwise no.
I say again – remove the red tape for existing advisers as the first urgent priority.
Get it done !!!
I have no problems with Accountants giving advice IF it is done on a level playing field. They pay the ASIC levy, PI, CSLR, and do the appropriate CPD.
And provide an SOA to the client, sign up to AFCA, be governed by the Code of Ethics, get fee consents signed if they charge an annual fee, meet the best interests test etc. etc.
Yes 100%