60% of SMSF trustees eyeing advice from their tax accountants

In new research from Investment Trends, 60 per cent of SMSF trustees using an accountant for tax purposes would use them for investment advice, but are facing barriers with licensing restrictions.

The 2017 Vanguard and Investment Trends SMSF Report found that a record high 277,000 SMSFs reported having unmet advice needs across three clusters of tax and super, retirement strategies, and investment advice. This is from a total pool of 585,000 SMSFs.

While trustees equally saw accountants and financial planners as trusted sources for their unmet advice needs, there was a gap in the service proposition of accountants that have seen trustees shy away from using one, Investment Trends found. This can be attributed, in part, to the new licensing regime for accountants, which requires them to be authorised under a limited or full licence to provide SMSF advice.

Out of the total pool of SMSFs, close to half chose not to use an accountant directly, while 214,000 only used an accountant for tax advice.

“If [an accountant’s] proposition is just around establishment and admin, someone else can do it cheaper so the opportunity is to expand your proposition,” Investment Trends research director Recep III Peker said.

"This highlights the risk of complacency in the accounting industry.

“If my accountant started providing investment advice, [like the] 60 per cent said, [I] would get investment advice from them because I've known them for a long time and I trust them and I know they'll look after me.”

However, the report highlighted how most accountants were not planning to obtain a license, with a growing proportion turning to build a relationship with a financial planning firm instead.

Up to 56 per cent of accountants said they employed someone in-house who could provide financial planning advice, and 19 per cent referred clients to financial planning firms, and 11 per cent received two-way referrals with financial planning firms.

Vanguard market strategy and communications principal Robin Bowerman, said the rise in this multidisciplinary practice was down to risk management by accounting firms.

“You hear a lot of accountants saying well we looked at it from a business point of view, we even talked to certain dealer groups and what they realised was, it's not easy to add the skills or a good financial planning business to an accounting practice and they actually realised that they don't know a lot about investing per se,” said Mr Bowerman.

“At that point it becomes a risk because if you think about an accounting practice they've got a lot of small businesses and they are doing the audit, the tax work for individuals, and the last thing they want to do is move into a financial planning business which could damage their relationship with the companies that they are servicing as their main clients.”

 

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