“This is where a firm basically finds someone who can plug the gap to get the application through with all the necessary experience,” said Ms Bowler.

Accounting firms looking to apply for their own AFSL tend to hire external responsible managers as ASIC will not accept an accountant’s past SMSF experience under the former accountant’s exemption or tax exemption as relevant experience.

When accountants applied for the limited licence before the end of the accountants’ exemption, they didn’t need the experience, Ms Bowler explained. However, they’re now “very much stuck in no-man’s land”.

“The only way they can go and get their own licence is to bring someone in-house and that doesn’t always sit comfortably with them,” she said.

With ASIC having recently proposed changes to the requirements for advice licensees, a possible solution to the concerns around the use of responsible managers could be a mentoring approach where mentors perform a supporting role for the licensee.

“Given the desire for many smaller advisers to move away from a vertically integrated model and establish their own licence, it would have been good if ASIC had explored the role of mentors,” she said.

“It would get around this concern that people have with these responsible managers for hire while acknowledging that licensees potentially do need some support that they might not have in-house and that they shouldn’t have to [pay] for that.”