Due to its complexities and limitations, some accounting firms are outright shunning the new licensing regime for SMSF advice, creating difficulties as the popularity of SMSFs continues to climb.
Accountants shunning licensing ‘minefield’
Speaking to Accountants Daily, Anderson Tax & Consulting executive director Debra Anderson said that the new SMSF licensing regime, which came into effect on 1 July 2016, is difficult to navigate for accounting firms.
“I’ve actually stayed right away from [SMSF licensing] because as far as I’m concerned it's just getting all too hard. That’s the truth,” Ms Anderson said.
“The problem is it's such a minefield. However, it’s not something I think I can even avoid forever, it's a necessary evil.”
Ms Anderson believes that the limitations on the advice accountants can give without breaching the regime do not result in the best outcomes for clients.
“This whole not being able to advise people is crazy because they're so entwined: we need to be able to give advice which is sometimes specific, we should be able to say 'No, this is not right for you' without being in breach of all these licensing things,” she said.
She added that with SMSFs becoming more and more common, it’s crucial that accountants are able to advise clients fully without breaching laws.
“SMSFs are so common these days,” she said. “I was setting up a payroll for a client with about 60 employees and 20 of them, I think, had self-managed super funds, which I thought was incredible. That’s a lot of SMSFs, and the client was a not-for-profit hiring all casuals.”
In a period of such rapid change and technological development, the licensing regime is just another issue for accountants to deal with, according to Ms Anderson.
“It's hard enough to stay on top of technology and tax and all the bits around it, the CRMs, the reporting, the proposal systems, the job systems, all of those things that we're trying to get our heads around, and now there’s this,” she said.
A significant portion of accountants are still unable to advise on SMSFs, with potentially hundreds of applicants waiting on the licence to be approved by ASIC.
For those accountants choosing the authorised representative route, many are still thought to be deciding on a dealer group to align themselves with.
Greg Hayes, founder of Hayes Knight, believes 2017 is the year accountants will make their choice.
“There’s about 54 per cent of super members between 55 and 74, and that represents over 500,000 SMSF members in that demographic. Those people are most likely to be affected by changes put in place and that is going to cause a significant increase in questions from clients – like 'Should I take advantage of non-concessional caps prior to 30 June?', 'What do the changes mean for the strategies I have in place?', etc,” he recently told Accountants Daily.
“Data shows the first stopping point going to be an accountant for those clients. Accountants who aren’t authorised won’t be able to answer those questions. That client push is going to cause a number of these accountants to crystallise their thinking.”
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