What is the difference between a Financial Planner and an SMSF Accountant?
SMSF accountants and financial planner roles are distinct and separate although naturally collaborative. A financial planner is responsible for the advice to the trustee on investment selection while the SMSF accountant’s role is compliance based. Not all trustees choose to use financial planners, and it is not a requirement of having an SMSF. However, where trustees do want both sets of professionals assisting them, the huge majority of these professionals will work seamlessly together to ensure that trustees comply with SIS Act, other tax laws as well as creating wealth for the member’s retirement while ensuring the day-to-day administration and operation of an SMSF run smoothly.
Needless to say, having a Self-Managed Superannuation Fund (SMSF) is very exciting but can also be a bit daunting. Having the right professionals to support you in this highly regulated environment is crucial.
What is the role of an SMSF Accountant?
The main role of an SMSF accountant is the compliance side of things including preparation of the fund’s financial statements, the SMSF tax return and managing things including the Registered Office, Electronic Service Address and other reporting obligations.
The role of an SMSF accountant also include:
- assisting trustees to manage, and not exceed, contribution caps
- account for and report new pensions to the ATO
- report partial or full pension commutations
- report and lodge Business Activity Statements (BAS) returns, PAYG instalments or quarterly withholding obligations and variations
- arrange for the fund’s annual required SMSF audit
- advice in relation to tax matters and tax planning
- respond to trustee queries about compliance with SISA
- organise and manage the corporate trustee
- organise the paperwork for a limited recourse borrowing arrangement
- organise the paperwork to change a trustee
- assist with the paperwork to establish or wind up an SMSF
What is the role of a Financial Planner?
work with the trustee to prepare the fund’s investment strategy- recommend investments
- assess investments for diversification and other client goals
- recommend contribution and pension strategies
- advise on death benefit nominations
Hint- A financial planner and a financial adviser are terms used interchangeably. There is no legal difference, and both have the same qualifications and expertise. An unlicensed person cannot hold themselves out to be either.
What is the major difference?
A licensed financial planner provides personal financial advice, prepares statements of advice (SOAs) and tells you what investments are best for you. An SMSF Accountant cannot give any of this investment advice but rather provides compliance advice. An SMSF Accountant tells you what you can do, but not what you should do!
What are the Licensing Requirements?
Financial planners are required to hold an Australian Financial Services License (AFSL) which is regulated by ASIC or be authorised under an AFS Licensee. They must also abide by professional code of ethics and standards. Generally, a financial adviser must have completed an approved degree, undertaken a professional year and passed the financial adviser exam.
An SMSF accountant, generally, must have an approved accounting degree, practical experience and a formal certification with one of Australian’s professional accounting bodies i.e. SMSF Association such as our Directors have as licensed SMSF Specialist Advisers. An SMSF accountant must also abide by their professional body’s ethical code and standards.
SMSF Specialist Advisors
There is a growing demand for SMSF accountants and financial advisers to undertake specialised training and education. Many accountants and advisers are undertaking further education through their professional bodies or SMSF Association (SMSFA) to become SMSF specialist advisors.
SMSFA provide a SMSF Specialist Advisor (SSA) accreditation program with course assignments. Completion of the SSA program does not allow an SMSF accountant to provide financial product advice but many AFS licensees have included the SSA designation as a prerequisite for providing SMSF advice. Additionally, SMSFA have partnered with Kaplan Professional to add the SSA designation to their Master of Financial Planning.
What are the general restrictions on financial advice from an SMSF Accountant?
An SMSF accountant is only able to provide advice regarding tax laws or compliance with SISA. They can advise a member about whether contributions will be within the contribution caps or what the caps are but cannot recommend what type of contribution to make or how much to contribute. An SMSF accountant cannot recommend an individual to establish or wind-up an SMSF, recommend a member transfer or rollover funds to their SMSF or provide advice about life insurance in a SMSF. They can assist with administrative tasks such as the paperwork to complete an SMSF setup, rollovers, add new members or trustees and valuation of fund assets.