Speaking to Accountants Daily, Smithink founding director David Smith said that accounting firms are still grappling to understand the new SMSF licensing regime, which came into effect on 1 July 2016.
“It's fair to say that the profession at large still has not really worked out exactly how to apply those laws effectively,” Mr Smith said.
“This whole area is still a really bit of a melting pot because firms are still trying to determine exactly how they go about providing services that allow them to provide some level of information to their clients without breaking the law.”
Mr Smith said accounting firms are also struggling to provide SMSF advice cost-effectively for their clients under the new regime.
“One of the things which is happening now is for many firms it's pricing them out of being able to provide self-managed super services, because the cost of doing statements of advice etc is making it too expensive and clients just don't want to pay,” he said.
“Then when you add to that the fact that there's still a truckload of firms that are fundamentally unlicensed, who are, dare I say, not necessarily following the law, those firms obviously don't have those additional costs.”
Mr Smith said that some firms are now pondering whether to operate under a limited licence or to get completely into financial planning.
“For many accounting firms who moved into this limited licensing regime, they’ve realised that actually the compliance burden is pretty tough, so perhaps they should have a full licence and get fully into financial planning since they’re halfway there already,” he said.
“There are also companies out there providing joint ventures and other ways of working with accounting firms to provide effective financial planning services to their clients.”
Mr Smith said accounting firms are also struggling to make a profit on their financial planning services.
“Many firms are struggling in their financial planning to actually make good profits because of this move away from commissions to fee-for-service,” he said.
“Many of them are struggling to really get pricing models right: to price it at a price that clients are happy to pay but still make an effective profit.”