Transition to Licensing

Transition to licensing

The countdown to the removal of the recognised accountants’ licensing exemption has well and truly commenced. Accountants are already over a year into the transition period, yet an enormous amount of uncertainty within the industry still remains.

Accountants currently offering SMSF advice need to make some important decisions sooner rather than later and begin to prepare their business for the new world of (limited) financial advice or be forced to refer this type of business to suitably qualified individuals.

But what does all this mean for the average accountant, and is the requirement for future licensing likely to be a burden or an opportunity for current practitioners of SMSF advice and support ?

Now is the time to make some well considered decisions

The steps required to be business ready for the new licensing regime should be undertaken as soon as practically possible. There is no real advantage in delaying preparations until the last moment; making a last minute rush into an ill-conceived business solution may prove costly in both time, dollars and client numbers.

Right now is the best time to assess all your options and make the right choices for both your clients and your practice.

Accountant licensing transition

The new world of advice

The experience for most accountants under this new world of limited licencing should be a positive one, as a broader range of advice can be provided than is currently permitted under the current exemption. While the limited licence will still allow a recommendation to establish or wind up an SMSF, it may also permit a broader range of SMSF advice such as contribution and pension advice, insurance needs and generic product advice in certain other areas.

Is a Limited License my only option?

No, accountants have numerous options available and there is definitely no one size fits all solution. Accountants need to decide their approach to providing an advice solution; from avoidance right through to full licensing that can cover all potential client advice scenarios. First and foremost accountants need to consider what levels and types of advice they want to offer their clients, and then seek out the best solution for all involved.

The primary options available for accountants include:

    • Avoidance: limiting advice to traditional accounting related advice and tax
    • Apply for, and maintain a limited AFS License
    • Operate as an authorised representative under an existing AFSL
    • Employ a suitably qualified financial adviser to work within the practice
    • Set up a joint venture with an established financial adviser to which clients can be referred

Each of the above options are not necessarily mutually exclusive; depending on your circumstances, a range of solutions may be considered and rolled out across your client base.

Cost will be a further important consideration, but it shouldn’ t be the only factor. Importantly, you need to ensure whatever option you choose, both you and your staff clearly understand what advice can and cannot be provided.

Most accountants view the ASIC application fee (currently around $1,485) as their only up-front expense, and fail to understand that licensing set up can cost accountants in excess of $10,000. Add in the additional compliance and management requirements around the ongoing needs of the license and many accountants soon realise that this approach is anything other than a “business as usual” solution for the firm.

When can I apply for Authorised Representative status or a Limited License?

Interested accountants can apply for the new limited license from July 2013, and you are able to seek authorisation from licensees such as Lifespan right now. If seeking to establish your own license you will need to be able to address a range of requirements including training, compliance, risk, people and resources obligations, professional indemnity insurance, dispute resolution and financial requirements.

Being authorised under Lifespan can offer a simpler and more cost effective solution, find out more today by contacting a member of the Lifespan Advice Development team.