SMSFs have increased regulations in the last few years. It was simple to get SMSF advice from an accountant and set it up before 2016 with the permission called accountants exemption. However, during the Financial Advice Reforms in 2016, the federal government removed the exemption so accountants were subject to tighter rules in giving financial advice. People providing SMSF advice should be licensed under an Australian Financial Services Licence and all advice must be formally documented in a Statement of Advice.
A statement of Advice or SOA is a written statement which explains the advice provided by a financial adviser to the client. It is evidence of the specific guidance, instructions and ideas of the financial adviser and how they say it should be done. It should outline the financial circumstances of the client, their goals, risk appetite, next steps and alternative strategies.
The SOA should include statutory disclosures and disclaimers to protect the client and financial adviser. It ensures the advice is reasonable and suitable for the needs of the client and shows any conflicts of interest or remuneration disclosures.
The SOA is needed when you’re seeking legal or financial advice and advice on setting up, running and closing your SMSF. If you are asking for a professional’s recommendation and advice. Seeking advice on the type of structure for your super is classified as financial advice and you would need an SOA. If you did your own research and just want an SMSF set up for you by an accountant, this is not classified as seeking financial advice so an SOA is not necessary.
An SOA is required if you’re seeking guidance on setting up an SMSF, the amount you should salary sacrifice or contribute to SMSF, to start or stop pension, withdrawing money from your super fund, what assets, how and when to invest and the beneficiaries in your estate management.
Some services do not need an SOA. If you are asking for advice, you may need an SOA. If you are discussing instructions or assistance in performing a tax, you likely do not need an SOA. You may not need an SOA if you ask how an SMSF works, you want to set up an SMSF, you ask help to fill out SMSF documents or completing paperwork, you ask guidance on how to remain compliant wit your SMSF tax return, you set up a super pension or ask assistance with the rollover of super balances on the trustee’s instructions.
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An SOA must be created by a licensed financial adviser. Meet with your financial adviser, discuss your situation and seek advice on a topic. They will do the research and come back with available options presented in a Statement of Advice. Once you agree, your financial adviser will assist you in implementing it.
Financial advice is heavily regulated so your financial adviser must take great care. It is a formal process so your financial adviser must have a good understanding of your situation and the results of the advice. The SOA ensures that you explore every option available. You financial adviser will take time to understand your circumstances and provide complete, unbiased and not rushed advice. Advice must be detailed, explained in simple terms with the pros and cons of each recommendation. It must serve as a reference point for the long term.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
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Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
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Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
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