By Angus Woods
For the past 12 months, The Australian Financial Review (AFR) has been bashing a panicked CPA over the role of their recently terminated CEO, Alex Malley, and more generally, the way the Board has run one of Australia’s oldest and respected associations.
As a CPA member, I find some of the reading particularly disturbing. Given the “professional readership” of the AFR, there is opportunity that advisers could paradoxically be seen in a better light than accountants. And I say paradoxically given the beating the advice industry has had in recent years.
Alex Malley recently received a $4.9M termination payout upon leaving CPA Australia
Adviser Ratings has had some concerned subscribers emailing us about the CPA of late. Does any of this mean that advised consumers should be avoiding accountants, or CPAs for that matter when seeking advice? Simply put, no. Whilst governance in any organisation can permeate through to its employees or its members, a culture is more often ingrained over many years and there is rightly some dissociation when it comes to a member v an employee. Notwithstanding, it is important that if seeking advice from an accountant they do have the appropriate training and background knowledge to give that advice. Whilst the accounting profession has been held in relatively high regard over the years, the leniency towards accountants in giving advice through previous exemptions by the regulator, may mean that they are not as versed in advice matters than pure financial advisers. However, this does little to suppress the potential regulatory concerns around CPA offering advice.
When receiving advice from an accountant we have been advising subscribers that they should make sure they are appropriately licensed. Whilst CPA now have their own advice license, many accountants are also authorized representatives under other licensees.
The battleground for the accountant
With advisers requiring at least a limited AFSL to give advice, many organisations are cognisant of the knowledge many accountants have around SMSFs and superannuation. In twelve months, advisers numbers have actually grown 10% from 23k to 25k, with more than 50% of this increase driven by the accounting profession.
Top 10 organisations providing advice in Australia
Many accountants will be authorised under the SMSF Adviser Network, a license setup by the National Tax and Accountants Association (NTAA) to provide basic advice. Ironically, CPA have 25 CPA accountants operating under its license, whereas the NTAA have 304 CPA accountants (of a total 738 advisers), earning the licensee at least $76,000 per month in fees from CPA accountants. It will be interesting to see if the reduced pricing now offered by the CPA will see an expansion in their adviser numbers or if the recent media coverage will scare off any accountants looking to the CPA for this solution.
With accountants now facing renewed pressure on both compliance and their ability to administer advice beyond the basics, ASIC may be faced with another barrage of advice not being delivered in clients' best interests. The "profession label" under which accountants operate will be appropriately tested given the varying remuneration opportunities that exist in financial planning.