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SMSF members avoid financial advice
Between one-third and a half of important transactions carried out by self-managed super fund (SMSF) go without the help of the licensed advice, according to the recent study from Apricot Actuaries.
Also, the research study, which surveyed over 300 accountants, found that the proportion without advice was similar irrespective to accountants giving financial advice personally and that it was rather the SMSF clients than accountants who were rejecting the licensed advice.
Apricot’s chief executive, Jim Hennington, said the survey helped explain why far fewer statements of advice (SoA) were being issued to SMSFs than the industry had expected.
“We looked at how accountants have actually handled the rules over the past 12 months,” he said.
“Two major facts stand out for me. Firstly, the average number of transactions per accountant is low at only two new SMSFs per year per accountant and new pension commencements.
“Secondly, even when transactions were implemented without licensed advice 83% of accountants still provide exempt tax advice and factual information at least part of the time to help their client make decisions.”
The study also revealed that 58% of surveyed accountants were either concerned or very concerned over clients who decided to receive no licenced advice at all.
Further to that, 66% of accountants said that when no financial advice was given it was because the client was reluctant to pay extra fees.
“51% said their SMSF clients don’t trust financial advisers and 45% said the licensed advice component adds little value,” Hennington said.
At the same time, worryingly 70% of accountants could not say, with a high degree of confidence, that they understood all the requirements of the rules around SMSF advice.
“If ASIC [Australian Securities and Investments Commission] removed the exemption to improve the quality of advice received by SMSF trustees it has failed. In fact, it has increased the risk that trustees will not receive any advice other than tax advice,” the firm said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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