We are now into the final 12 months before the accountants’ exemption is removed. And to date, I estimate that only a few hundred accountants have become licensed or authorised. Quite frankly, I’m astounded at how few accountants have begun their licensing journey. However, based on my discussions with hundreds of accountants, I’m not surprised. Most practitioners are confused and are receiving different messages from various sources. No wonder it’s difficult to make a decision.
The opportunity for accountants to embrace licensing and use it to turn their businesses from compliance to advice is enormous, but I’m very concerned that accountants may continue to stick their heads in the sand and miss the boat.
From my discussions and feedback, I see three major roadblocks to licensing – grey areas that once clarified should leave accountants with nowhere to go, apart from the start line!
Roadblock 1: Do I really need licensing?
We have identified the top 20 financial planning strategies accountants want to provide advice on (refer to checklist as part of our Interactive start-up tools). Of those, at least 17 will require licensing, but possibly all of them, depending on how far the conversations go with your clients. (the highlighted text are the only ones that may not need licensing)
Let’s be clear here. You have been able to, and can continue to provide factual information to your clients. In most instances, there are probably opportunities to weave some tax advice in, but limit your conversations so as to avoid licensing. My question to accountants though is – why do you want to keep limiting the advice and service to your clients? The only answer that makes sense to me is if you have someone else in your business who is providing that service to your clients, or a strong referral arrangement where these issues are appropriately managed.
However, if you’re like most accountants, clients come to you to for advice, not just the facts – so why would you not want to be in a position to provide it.
Roadblock 2: I don’t know what training I need?
A major licensing roadblock surrounds the issue of training. There are specific training requirements that apply if you want to have your own licence for your nominated responsible managers. In addition, there are training requirements that apply to anyone (self licenced or authorised) who is actually providing the advice to the client. Two major hurdles here include:
- Training needs vary depending on what you want to be licensed for; and
- Licensees (who are ultimately responsible for ensuring appropriate RG146 training has been undertaken) vary significantly in how they interpret the requirements.
To overcome the confusion, and provide a consistent training approach for accountants, we asked a group of key stakeholders to identify the RG146 training they would expect for the top 20 advice areas. Based on their feedback, we developed a training matrix and interactive tool to help map the training needs specific to your circumstances. (I can provide a link/website reference to the matrix, or provide a copy if you wanted to publish it. We have a stand-alone and an interactive version).
Roadblock 3: Self-licensed or authorised
While this is absolutely a decision you will need to make at some point – a couple of points to note.
- 1.You don’t need to make this decision before you begin your journey (just get started and do your training as you need it regardless of the option you choose)
- 2.You’re not locked in forever
After 1 July 2016, you will not have the option of obtaining a limited licence without meeting the experience requirement first. So if you are thinking of becoming an authorised representative, and then decide it is not a good fit for you, the limited licence will still be an option, because by the time you decide it’s not a good fit, you should have sufficient experience to meet that requirement.
Cost is often raised as a reason for obtaining your own licence. In my next article, I will address this issue specifically and break down the costs of self-licensing versus becoming an authorised representative. However, I urge you not to let cost drive this decision. Your decision should be based on:
- Your confidence in meeting the ‘best interest duty’ and ‘appropriate advice’ requirements.
- The time you, or someone in your practice can dedicate to meeting your licensing requirements (at least 1 day per month).
- Processes in your business to ensure you can manage your licence obligations effectively and efficiently.
There’s no doubt that the journey will be challenging. And while I’ve highlighted the three biggest roadblocks facing accountants, the underlying roadblock by far is getting over the fear that when you are offering professional advice, you are helping your clients and adding value, not ‘selling’ them something they don’t need or want.
Article published in Professional Planner magazine - July 2015