The role of accountants and financial planners in SMSFs

Accountants and financial advisers have distinct roles when it comes to the establishment, administration, compliance and winding down of SMSFs.

This makes sense when you keep in mind that accountants and financial planners have very different educations and are qualified to perform different roles.

The advice that accountants* can provide on SMSFs is limited by law. As general accountants do not have an Australian Financial Services (AFS) licence, there are rules on what they can and cannot recommend to clients.

Do keep in mind that as you read the list below, Verve Group also has licensed financial advisers that can assist you with the financial advice facet of your SMSF.

Confusing, I know - but stick with me.

Here's the list of what accountants can't do (but financial advisers can):

• Accountants cannot recommend that a client should establish or wind-down an SMSF

• Accountants cannot recommend a super fund or that a client switches to another type of super fund.

• Accountants cannot recommend transferring assets from any financial asset to another super fund or closing a super fund.

• Accountants cannot recommend a client transfer or rollover funds to the SMSF.

• Accountants cannot provide any advice relating to particular assets of the SMSF, including disposal or acquiring of financial products or classes of financial products.

• Accountants cannot prepare or review an investment strategy for an SMSF.

• Accountants cannot recommend the client change contribution amounts or stop making contributions to an existing fund and instead contribute to the SMSF or change the investment options of an existing fund.

• Accountants cannot recommend the client’s employer cease making SG contributions to another fund and commence making contributions to the SMSF.

• Accountants cannot advise on specific investments that should be acquired or disposed of. Accountants cannot provide financial product advice on any other superannuation.

• Accountants cannot provide advice about insurance within a client’s super fund or any other fund.

• Accountants cannot recommend any specific contribution level.

What's the common theme with all of those areas of advice?

If you guessed "it's all financial advice", then congratulations, you're correct. Gold star for you!

So to recap, everything you just read above on that list, the financial planners at Verve Group can take care of it.

(L) Matthew Carberry - AFS 000231717 (R) Craig Holly - AFS 000383555

The friendly faces you see above are Verve Group's licensed financial advisers. They have to follow strict guidelines and undertake professional development to continue holding their AFS (Australian Financial Services) licence, so it really does make sense that only they can provide financial advice regarding your SMSF.

Both Verve Group's accountants and financial advisers are under the same roof which provides convenience for our clients managing SMSFs.

Now, you're probably wondering what accountants actually can do to help manage your SMSF. We'll lay down some real examples in a moment, but for now, get ready for another wordy list:

• Provide factual advice about the value of consolidating super assets into a single fund.

• Where the client controls, or will control the management of the SMSF you can process the transfer or rollover of funds into, or out of, an SMSF provided the decision to transfer or rollover the funds has already been made.

• Advise on administration and operational issues, including establishment, the addition of new trustees/members and valuation of the fund assets.

• If the recommendation is reasonably necessary to and an integral part of advice about the establishment, operation, structuring or valuation of the fund, you may be able to recommend your client join an SMSF. Provide advice for the sole purpose of ensuring compliance e.g. in-house asset rules, modifying contribution levels due to changes in SG.

• Advise a client on whether they should acquire or dispose of an interest in an SMSF, provided the client is or is likely to become a trustee, a director of a trustee, an employer sponsor or a person who controls the management of the SMSF.

• Advise on insurance risks associated with changing superannuation funds.

• Provide factual information on the tax treatment of contributions and compulsory SG.

• Advise on SIS compliance in a fund audit.

Some real life examples to illustrate the distinction between roles:

A client wants to set up an SMSF and asks our accountants to carry out the establishment of the fund.

This is fine, because the accountant has not made a recommendation to the client. We are just carrying out the work.

A client requests their accountant to prepare an investment strategy for their SMSF.

This is not possible, as the accountant is not licensed to form an investment strategy. The accountant will have to refer the client to a financial adviser.

A client requests that their accountant reviews the SMSFs investment strategy.

Again, this is not something an accountant can do. The client must see a financial adviser.

A client asks their accountant if they should wind-down their SMSF. The accountant gives advice that they should wind-down, and carries this out for the client.

This is not possible. The accountant cannot give advice on whether to wind-down an SMSF.

A client decides that they want to wind-down their SMSF and informs their accountant who helps them with the process.

Yes, this is fine. The accountant is carrying out the wishes of the client and has not made the recommendation to the client.

We hope this clears up any confusion you might have in regards to the roles accountants and financial advisers play when it comes to your SMSF.

If you have any questions, feel free to call Verve Group on (08) 8120 4877.

*Throughout this article we refer to accountants as recognised accountants that do not hold an AFS licence.

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives.

Please note that this article is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. To the extent permitted by law, no liability is accepted by Verve Group or the Author for any loss or damage as a result of any reliance on this material. This material contains, or is based upon, information that the Author believes to be accurate and reliable, however neither the Author or Verve Group offer any warranty that it contains no factual errors.