The SMSF Association is urging the Quality of Advice Review to “set in stone” the need for specialist training for those advising the more than 1.1 million Australians who are members of a self-managed super fund (SMSF).
In its detailed submission to the Review, the Association recommends that professionals providing SMSF advice should be required to have completed specialist education – in line with the Productivity Commission’s 2018 Superannuation report, FASEA’s Financial Planners & Advisers Code of Ethics 2019 Guide and ASIC’s Report 575.
SMSF Association CEO John Maroney says: “All these reports highlighted that education improves the quality of advice and consumer outcomes. As such, an approved course or accreditation must be completed, and appropriate ongoing professional development maintained to retain that certification or accreditation.
“We believe requiring advisers to have specialist advice competencies in certain areas is important to lift the professionalism and integrity of the advice industry.
“Our research shows that 63% of SMSFs were established on the suggestion of an adviser and 81% of SMSFs use some form of adviser, highlighting that the quality of advice can materially affect the retirement savings of most SMSF members.
“If members and trustees do not understand their obligations and the time required to manage an SMSF, this can not only result in severe penalties and sanctions, but a lack of effective engagement and management causing significant financial detriment.”
Maroney says its submission recommends that financial advisers have access to essential client ATO superannuation reports. “Since the introduction of the concepts of Total Superannuation Balances and Transfer Balance Caps on 1 July 2017, advisers and administrators have needed access to crucial ATO client superannuation reports.
“The introduction of multiple Total Superannuation Balance thresholds and the pension Transfer Balance Caps have added further complexity to the provision of superannuation advice. This is in addition to the management of individual contribution caps and of different bring forward and unused contribution cap concessions.
“The indexation of the Transfer Balance Caps on 1 July 2021 has added further to this complexity, so giving advisers access to the ATO portal is a crucial reform.”
Other key points in the Association’s submission are:
- Limited licensing for accountants has failed. There are several issues under the legislative framework that create a regulatory burden and uncertainty for accountants (licensed and unlicensed).
- A comprehensive review of the sophisticated and wholesale investor regime is needed. Using this regime for the sole purpose of minimising the compliance burden for advisers is not appropriate.
- Removing ambiguity regarding the application of the design and distribution obligations and target market determinations to SMSFs. We believe these provisions should not apply to establishing an SMSF, adding a new member or when starting a pension.
Maroney concludes: “The professionalisation of our sector must be duly recognised – a system where suitably qualified professionals provide the advice they are qualified to provide. Further, they should be able to apply their professional judgement in line with other professions.
“This involves recognising the various industry participants operating in the financial advice sector and the different types of advice services they provide. Many facets of the current legislative framework are based upon the provision of financial product advice and assume industry participants are providing comprehensive financial advice.”