Jaime Lumsden Kelly

Accountants who believe they can cease to advise on SMSFs following removal of the accountants’ exemption need to think again.

While exiting the SMSF advice space is a valid alternative to becoming an AFS licensee or authorised representative, accountants will still need to comply with the AFS requirements.

The key issue facing accountants is understanding what ‘financial product advice’ is, so that you know how not to provide it!

Consider this. Do you know how to:

• Recognise and avoid dangerous client questions that tempt ‘advice’ answers?
• Understand how to change opinions into factual information that still provide value?
• Identify what part of your current SMSF services is not financial product advice e.g. advising on SMSF tax requirements?
• Know when to refer clients on to a financial planner for advice?

If you don’t, you could be at risk of a breach of the Corporations Act requirement that prevents you from providing advice without a licence.

And have you done the following:

• Implemented policies and procedures to assist staff to know what is and is not financial product advice and to identify what activities staff can and cannot do?
• Established referral arrangements with other accountants or SMSF specialists so that clients can still access the advice they need?
• Identified at what point in a discussion about SMSFs clients need to be referred to a financial planner?

Above all, accountants shouldn’t be fooled into thinking they can establish SMSFs on an ‘execution-only’ basis, without advising clients about the suitability of an SMSF. While SMSF establishment is exempt, ASIC is likely to scrutinise this activity closely to find accountants who are still recommending SMSFs ‘off the books’ or ‘by implication’. A solid referral relationship with an AFS licensee who can provide this advice will go a long way to demonstrating compliance.

Don’t forget – accountants who are not licensed or authorised can’t even tell clients requesting SMSFs that it’s a bad idea for their situation.

More information about the pros and cons of licensing can be found in our blog here: A Guide To Help You Choose.

Accountants who have already decided to obtain their own licence, or those still unsure of their course of action, should consider attending The Fold’s Responsible Manager MasterClass to be operated in conjunction with Perpetual Private, which will provide detailed information about the AFS licence requirements.

The Fold can also assist by:

• Setting up policies and procedures;
• Reviewing authorised representative agreements; and
• Assisting accountants to obtain a licence – we offer DIY Kits and an end-to-end licensing solution.

By Jaime Lumsden Kelly

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