With the government set to review some of the regulations around strategic advice for SMSFs, a technical expert says any new advice model in this area must ensure a “consistent consumer experience” regardless of what type of professional a client sees.
In November last year, the government stated that it would support, in principle, a recommendation from the review of the Tax Practitioners Board (TPB) to initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to.
The final report of the TPB review noted that providing advice on establishing an SMSF is advice about a structure, and in the same vein as advice on establishing a company or trust.
The release of the TPB review also follows ASIC’s consultation paper on affordable advice aimed at exploring some of the impediments to providing scaled or limited advice.
Speaking to sister title SMSF Adviser, BT head of financial literacy and advocacy Bryan Ashenden said the discussion around whether the regulatory burden around certain types of strategic advice, including advice for SMSFs, is an important one, particularly if it helps more consumers to get advice.
“As long as it’s good advice, then that’s a good thing and we shouldn’t shy away from that, but we need to ensure that it is good advice that people are receiving and part of that is around the training for the people providing that advice, the type of documentation and the level of documentation that is provided to a client,” Mr Ashenden said.
“I think what’s really important is not so much whether it’s an accountant or a financial planner providing this type of advice; it’s that a consumer has a consistent experience. So [whether] you go to a financial adviser or an accountant for the set-up of an SMSF, I think the consumer should receive the same level of documentation and the same level of protection, so still getting a statement of advice, [for example].”
He noted that when ASIC granted relief to enable affordable advice for the COVID-19 early access to super scheme, its approach was consistent across both the financial advice and accounting professions.
“I don’t think as many people took up that opportunity from ASIC as was expected, but I think ASIC was doing the right thing by saying that we need to have a consistent approach [regardless] of whatever regime you’re operating under,” he said.
Mr Ashenden said that if further types of strategic advice are opened up to accountants, this could still be managed under their responsibilities and their duties with the Tax Practitioners Board, but it should be the same approach taken by other regulators.
“It’s not that they have to be subject to another regulatory scheme, in the same way that advisers don’t want to be subject to too many, but for these sorts of things [to work], you need to have consistency, so you want those different regulators making sure that they talk to each other,” he explained.
Separating strategic advice from the advice regime, he warned, could potentially present some risks which would need to be managed.
“There’s a risk that you could provide a whole lot of strategic advice and the client then runs away and does their own product piece. With an SMSF, for example, they’re the trustees, so they’re making the decisions and they might go off and do that, but does that mean you lose the connection between having really good strategic advice and the right product advice to go with it?” he questioned.
“Putting that aside, there are some great benefits to separating them for people looking to start their journey from an advice perspective because they’re able to dip their toe in the water and say I actually just need some strategic advice here, and if that’s a good way just to get people to experience what advice is actually all about, then I think we’ve got to try and see how we can get this to work.”
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