Push for accountants in advice continues in pre-budget submissions

The chorus of voices arguing for accountants to provide financial advice continues to swell, with Chartered Accountants ANZ, the Institute of Financial Professionals Australia (IFPA), and the SMSF Association all using their pre-budget submissions to highlight the topic.

At the crux of the argument for proponents of expanding accountants’ scope is that they would help fill the advice gap.

As CA ANZ put it, an ageing population means it is “critical that individuals can navigate their retirement puzzle easily and simply”.

“Expert financial advice is necessary for all Australians to work through the superannuation, taxation, age pension and aged care regulatory maze. To enable this, legal complexities and inconsistencies need to be removed,” its submission said.

“Australia needs more financial advisers, and this is unlikely to change quickly enough even allowing for the government’s Delivering Better Financial Outcomes announcements.”

That’s where accountants come in, according to CA ANZ.

“Our members are highly trained and skilled and can assist, but the regulatory environment needs urgent reform to allow our members in public practice to assist their clients with their everyday financial challenges,” it said.

“These reforms can be combined with the current review of financial adviser education standards.”

Similarly, the IFPA said that the way the financial advice system is currently constructed is “not fit for purpose”, leaving super fund members and SMSF trustees cut off from accessing “good financial advice when they need it”.

Acknowledging that the government’s response to the Quality of Advice Review (QAR) was a “step in the right direction” for financial advice, the IFPA echoed sentiments the SMSF Association had previously shared that failing to address the role accountants can play in providing advice.

“As trusted, qualified and experienced professionals, accountants play a vital role in assisting their clients with their financial arrangements,” the IFPA said.

“We would like to see qualified accountants fill the advice gap in some way, particularly if employees of banks, superannuation funds and insurance companies will be given the opportunity to provide advice to their members.

“Accountants have the expertise and are just as competent as other providers to give advice to their clients.”

Crucially, the IFPA said its members are not looking to provide the full scope of financial advice offered by relevant providers, specifically noting that it is “not requesting an exemption for accountants to offer financial product advice in relation to the underlying assets within a superannuation fund”.

“Providing product and investment advice remains the responsibility of a licensed relevant provider,” it said.

“Rather, our members want to provide strategic and structural superannuation advice to their clients relating to their tax affairs. Examples of common superannuation related advice services include the ability to make contributions, commence a pension, establish and assist with the process to operation of an SMSF, winding up an SMSF, etc.

“If accountants are granted an exemption to provide strategic and structural advice, we believe financial advisers should also have the same exemption in those situations. In other words, if this type of advice is not classified as ‘financial product advice, then both accountants and financial advisers should follow the same rules regarding the need for a statement of advice (SOA) or record of advice (ROA).”

The SMSF Association, meanwhile, pointed to the 2019 James review’s recommendation that the government “initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to”.

This recommendation was “largely ignored” by the QAR, the SMSF Association added, leaving accountants searching for clarity.

“Advice in relation to SMSFs is not only about establishing an SMSF, it is being able to advise a client not to establish one or when to exit where an SMSF is not appropriate. These types of advice all constitute financial product advice. An SMSF is not suitable for everyone, and we have a severe advice gap in the market,” the submission stated.

“Financial advisers are reporting that they are at capacity, and accountants are reporting that clients who urgently need financial advice are unable to access that advice.”

Furthermore, the submission stated that the proposals for tranche two of the QAR reforms would see the introduction of a new class of adviser for the large APRA superannuation funds.

“Their stated role is to address the advice gap for the many unadvised Australians. We support these reforms in principle, and they are urgently needed. However, this is creating a significant gap for middle Australians who have sought to take control of their financial wellbeing,” it added.

“Critically, we do not support the return of the former accountants’ exemption. What we do support is legislative certainty on what is defined as a tax agent service, and exploring the role accountants can play regarding financial literacy, education, and nudges.”

Appearing on The ifa Show in December, shadow financial services minister Luke Howarth supported calls for accountants to be able to provide some form of financial advice to help fill the gap in advice accessibility.

“At the end of the day, I respect accountants significantly,” he said.

“My experience with accountants is they’ve provided good advice. They’re often people that you go to if you want to look at setting up a self-managed super fund and they’re qualified people that know tax law inside out.

“So, giving a little bit of advice, I don’t fear that at all from accountants and I think it probably should be looked at.”

The shadow minister added that there needs to be more collaboration between the professions.

“Financial advisers shouldn’t fear accountants. Accountants are good people, they’re well qualified and we actually want to try to get more people into financial advice as well,” Howarth said.

“There’s plenty of work for them at the moment. We want to reduce their regulations so let’s work together.”