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SMSFA moves to trim licensing restrictions
The SMSF Association is moving towards establishing a future model for SMSF advice where certain key elements of a client’s financial life cycle, such as starting a pension or contributing to super, will not require a financial services licence for professionals to assist clients.
Speaking at a Pritchitt Partners event in Sydney on Thursday, SMSF Association chief executive John Maroney said as the financial advice industry moved away from a product-centred approach, it made sense to reexamine the licensing framework around this and move towards a system that would provide more value for SMSF trustees.
“Our view is where simple advice is required, where strategic advice is required, that it doesn’t involve the sale of a product — if it’s the sale of a product it probably fits neatly under the financial product advice,” Mr Maroney said.
“I support the idea that we should be moving to a system that focuses on financial advice; it shouldn’t be part of a product distribution paradigm, and that will take a while to get to because we’ve had financial product advice from the regulator’s point of view for decades, and from the industry’s point of view that has been a big part of how revenue generation works, but we need to move away from that.”
He added that the association aimed to do away with statements of advice for SMSF clients who were looking for assistance with administrative aspects of their fund that did not involve product recommendations.
“In the SMSF area, things like we believe starting a pension should not require a statement of advice, that is something accountants should be able to deal with without going through a formal financial advice stage,” Mr Maroney said.
“Giving people advice that it’s a good idea to contribute to super in general without specifying a particular fund shouldn’t require financial product advice, that should be something that is part of tax and strategic advice.”
He said that the SMSFA, in consultation with the other major accounting and advice industry bodies, was “still working on” a detailed model to take to government and was conscious of retaining a level playing field between the two professions.
“We’re talking to [the] other associations to come up with something that isn’t just for accountants and isn’t just for our members; it’s something that applies across the board,” Mr Maroney said.
“There should be a way of helping those Australians; however, they are saving for retirement or needing investment advice or risk advice, that they should be able to get help and support and guidance before you get into full financial advice.”
Anyone who supports that talking to someone about starting a pension is not financial advice and therefore does not require a Statement of Advice has a vested interest or is a fool. Stating that the SOA and the associated advice can be provided in a more efficient manner than the current cumbersome approach is a different statement. I'm starting to think this bloke is both a fool and has a vested interest0- What about a royal commission into grossly incompetent legislation and policy?0
- So starting a pension should not require a Statement of Advice (or the advice therein presumably)? This is possibly one of the watershed moments of a persons financial life, and there are a large amount of factors that should be taken into account - Centrelink implications of switching to pension phase under Age Pension age? Estate planning implications? But you shouldn't need to provide a Statement of Advice? This kind of statements from the SMSFA makes them look biased and uneducated, to be honest. As a member, I was very disappointed with the way they have decided to go down this track. Yes clients need a simplified model, but it still needs to be a model where they are actually receiving appropriate advice. Regardless of the status of the product, there still needs to be advice given to cover off all the bases. And that requires, and should continue to require a licence!!!0
- I think the point is that this type of advice should involve simplified disclosure statements rather than extensive statements of advice. I believe the idea involves appropriate education/registration as well.0
- But that in itself is problematic. The changing to pension phase is probably one of the times when a full set of recommendations is required. There are so many possible outcomes to switching to pension phase that this is exactly where an extensive Statement of Advice is required. Don't get me wrong, there certainly circumstances where a simplified disclosure statement may be acceptable, but commencing a pension phase simply isn't one of them.0
- If they made commencement of a pension compulsory from age 65 (or whatever the Centrelink pension age ends up being), then no advice would be required. And the SMSF ABP should, and therefore will, be taken into account in assessing eligibility for an Age Pension.0
- As a I loathe strangulation by regulation ideas such as this are good in principle. My concern relates to, what returns are required with what drawdowns to find lifestyle beyond average life expectancy? What risk is appropriate for the fund and has proper liability matching and liquidity concerns been dealt with? What is the impact of a lump sum withdrawal for the world holiday the client wants?
We need a simpler system but going to this level is a bridge too far. The lack of product is relevant but these other aspects are not irrelevant and professional advice is required and should not be totally unstructured. I know some excellent accountants who cannot deal with some of these questions solely due to lack of appropriate training and experience. They could easily make that step. But going back to the old fashioned free for all is not the answer.
0 - By the time this legislation goes through the amount of advisers available to give even "non-product advice" will have dropped by another 10,000 or so. The government owe Australia's public a serious apology for over-regulating and ASIC are the worst. ASIC could have made this far easier by providing a BASIC FORM, acceptable to them, which would have reduced the costs. We have a tax return provided by the government, why not an advice form? Even if it could only be used in particular circumstances. Toooooo late!0
- You have my support John!
The current definition of a ‘financial service’ (that requires an AFSL) is fixated on whether you influence the client to choose a specific product. But that’s not really what financial planning and financial advice is about in a fee-for-advice world.
We need to align the regulatory definitions with what the public think advice is and what the public expect from practitioners. Even the word advice means many things in different contexts. Advise can mean to coach, educate, inform, recommend.... Each of these implies a very different balance of responsibility between client and ‘adviser’.
Clients should have an option to get some good guidance but still retain responsibility for their own decisions - at low cost, low red tape and from very well trained people.0 - Ah John, a Super Pension is a Financial Product.
Just the same as a SMSF is a Financial product.
And if you want to change that then you are talking a complete rewrite of advice laws from the ground up.
Be wonderful if it was made more efficient and there was bucket loads of BS Red Tape Regs dropped.
But they are not small tweeks you are talking about.0 - It is about the time to realise mistakes of the past.0
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