Kath Bowler

Founder and CEO

Licensing for Accountants

S14 Remaining unlicensed? How to operate in practice now

Unlicensed Accountants

What now…?

L4A.com.au

Objectives for today

L4A.com.au

• Help you understand where the licensing line is

• Tips on how to make licensing work – for unlicensed accountants

• What if you change your mind?

Let your business model drive your decision

L4A.com.au

Client needs

Business

Tax, compliance and audit

Transaction processing

Business advisory

Structural advice

SMSF

Tax, compliance & audit

Simple strategic advice

Complex strategic advice

Investment advice

Insurance advice

Individual

Tax advice

Super advice

Non-super advice

Investment advice

Insurance advice

Structural advice

Does not require AFSL licensing

Requires licensing

May require licensing

L4A.com.au

Where is the licensing line?

L4A.com.au

Advice/service without licensing

Advice/service with licensing

The licensing line

No advice

Doesn’t relate to a financial product

Strategic advice Recommend

establishing & closing down SMSFs

• Investment recommendations

• Insurance recommendations

Broad asset allocation

Tax advice

Trad. a/c activities

1 July 2016

Product advice

• Pensions, borrowings, death benefits

• Rollover advice

• TTRs

• Investment recommendations

L4A.com.au

Advice/service without licensing

Advice/service with licensing

The service/ advice

Factors youconsider

• Implementation on client instruction only R7.1.29(3)(f)

• Client instructiononly

The service/ advice

Factors youconsider

• Advice to establish

• Implementation

• Is an SMSF appropriate

• What about the existing fund

• What about alternative structures

Example - SMSF Establishment

L4A.com.au

Advice/service without licensing

Advice/service with licensing

Example - Contributions (end of year tax planning)

The service/ advice Factors youconsider

Options to reduce tax:• Super contributions• Distributions to a

family trust• Immediate tax write

offs• Delay receipt of

revenue

• Tax

The service/advice

Factors youconsider

• How much thecontribution should be

• Tax• Current super

balance • Desired super

balance• Other uses for

the money

L4A.com.au

Advice/service without licensing

Advice/service with licensing

Example - Pensions

The service/ advice

Factors youconsider

• Advising a client about minimum and maximum pension amounts

• Compliance requirements

The service/advice Factors youconsider

• The recommendedpension amount

• Current super balance

• Desired income• Life expectancy• Intentions for the

super fund (spend, bequest)

L4A.com.au

Advice/service without licensing

Advice/service with licensing

Binding death benefit nominations

The service/advice Factors youconsider

Identify ways to distribute super:• Binding death

benefit nomination• No nomination• Reversionary

beneficiary

• Tax

The service/advice Factors youconsider

• Recommend a Binding Death benefit nomination

• Tax• Client goals• Current family

situation• Who should be

the beneficiary

L4A.com.au

Are you staying behind the line?

• Are you really only giving tax advice?

• Have you provided an appropriate disclaimers?

• If the client has not sought advice elsewhere, is there any implied advice?

• How would the client relay the conversation to friends/family?

• General advice is defined in the legislation – AND it’s over the line (ie: it requires licensing)

L4A.com.au

Advice/service without licensing

Advice/service with licensing

Key principles to follow

1 July 2016

- Be reactive

- Provide compliance advice only

- Act on client instruction

- Only take tax into account- Be pro-active

o Ask questions

o Make suggestions

o Provide alternatives

- Provide an endorsement

- Take personal circumstances into account

Understanding the Licensing Line

L4A.com.au

Our top tips to make it work

• Understand the exemptions that remain, and their limitations

• Free resource - Financial advice and Regulations: Guidance for the accounting profession

How we can help

• Licensing Line webinar (pre-recorded). Includes:

Dual obligations manual

Assessment option for CPD points

Cost - $399 incl. GST (webinar + one assessment)

Additional assessments - $99 each incl. GST

L4A.com.au

How to make licensing work –for unlicensed accountants

How to make licensing work -for unlicensed accountants

L4A.com.au

1. Be clear about what you do – and do not offer, and communicate that to your clients

2. Review your referral relationships

3. Be wary of providing ‘execution only’ services

4. Document, document, document

You can’t do what you’ve always done

Services you can and cannot offer

L4A.com.au

Client needs

Business

Tax, compliance and audit

Transaction processing

Business advisory

Structural advice

SMSF

Tax, compliance & audit

Simple strategic advice

Complex strategic advice

Investment advice

Insurance advice

Individual

Tax advice

Super advice

Non-super advice

Investment advice

Insurance advice

Structural advice

Does not require AFSL licensing

Requires licensing

May require licensing

Communicating to your clients

L4A.com.au

Our tips to make it work

• Review your website for any misleading information

• Send a letter to all SMSF clients advising them of any changes to your current service

• Prepare some FAQs on why you decided not to become licensed

How we can help

• Template client letter

• Email info@L4A.com.au to receive a free copy of the letter

Review your referral options

L4A.com.au

In-house options

1. Someone in the practice becomes licensed

2. Recruiting someone to provide a licensed service

More traditional models

1. Formal external partner/JV

2. Informal external partner

3. Panel approach

Emerging models

1. Outsourced for SMSF specialist advice

2. Direct (Robo advice)

Be wary of ‘execution only’ services

L4A.com.au

Our tips to make it work

• Obtain copies of advice SOAs, if they exist

or

• Have client sign a letter that you recommended they seek advice – and they declined to do so

USE SPARINGLY & WISELY

How we can help

• Our template letters cover some ‘execution only’ services, including SMSF Set ups

Documenting your services

L4A.com.au

Our tips to make it work

• Ensure you use disclaimers

• Use emails instead of file notes – so the client has a record of the conversation

• Refer to external websites (ATO, ASIC) for factual information

How we can help

• Library of template letters available (currently 12). Includes:

SMSF accounting engagement letter

Licensing assessment tool

Cost - $88 per month (incl GST)

L4A.com.au

What if you change your mind?

Let your business model drive your decision

L4A.com.au

Client needs

Business

Tax, compliance and audit

Transaction processing

Business advisory

Structural advice

SMSF

Tax, compliance & audit

Simple strategic advice

Complex strategic advice

Investment advice

Insurance advice

Individual

Tax advice

Super advice

Non-super advice

Investment advice

Insurance advice

Structural advice

Does not require AFSL licensing

Requires licensing

May require licensing

Licensing options

L4A.com.au

Limited Licence

• That ship has sailed – for now

• 3 years experience requirement now required for Responsible Managers of a Limited Licence

Your options

• Become authorised (at least initially)

• Hire someone with the necessary experience

Authorised representative – your options

L4A.com.au

INSTITUTIONAL PRIVATELY OWNED

Royston Capital

Choosing a licensee – key factors

L4A.com.au

1. Geographic location

2. Referrals

3. Level of authorisation

4. How advice templates are prepared

5. Operational support

6. Transition support

7. A good ‘cultural’ fit

Choosing a licensee – other factors

L4A.com.au

• Initial training requirements

• Their understanding of accountants

• Do they want you to be an adviser or a referral source

• Client ownership (BOFR/BOLR)

• Credit licensing

• Compliance with APES230

• Cost

Objectives for today

L4A.com.au

• Help you understand where the licensing line is

• Tips on how to make licensing work – for unlicensed accountants

• What if you change your mind?

Unlicensed Template Solution – Online Demonstration

Friday, 29th July: 11am – 12 noon

Ph: 1300 930 328 or email info@L4A.com.au

Thankyou

L4A.com.au

Licensing for Accountants has taken reasonable care in producing the information found in this presentation at the time of writing. However, the information contained in this document provides a general guide to our services only. Changes in circumstances may occur at any time and may impact on the accuracy, reliability or completeness of the information and we exclude liability for any decision taken on the basis of the information shown in or omitted from this presentation.

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