SMSF loan financial planner sign off
- Thread starter Sydniygirl
- Start date
Just wait until the "best interest" duty comes in in July 1st.
I think you are looking at this Financial Planner Certificate signoff from a very narrow perspective. Even though it seems to you that you know everything about lending, the Financial planners role is not just to signoff that you have the right loan. It is to certify that your SMSF is compliant. That your SMSF is not invesing outside its investment strategy and that your SMSF investment is not in breach of the SIS act and your trust deed (which could be more restrictive than the SIS act itself). Don't Pho pho this as this act is more important than the loan itself as non compliance can cost you 46.5% of your super balance. Banks realise this and therefore insist that you are protected, hence this FP signoff Sidniygirl. Working in a bank does not make you an expert in lending and SMSFs, and if you are happy without an advisor so be it, as you could miss out on good quality advice.
Very Good Points Richard
You have raised some very good points, Richard.
Why charge $450. As you do not advice but sign with no responsibility, your signature should be free. WHY do you charge? You also do not need the money! As you said so.
There are some financial planners who think they can sign this certificate, but actually they need to be authorised to sign it in the first place. Sidneygirl, I would advice you to check with your adviser if they are authorised to advice on SMSF's. This would be in the form of a certificate from their dealer group (licencee). Their Financial Services Guide (FSG) should also indicate as to what they are authorised to advice on. Advice from a financial planner needs to be via a STATEMENT OF ADVICE (SOA).
You have raised some very good points, Richard.
Why charge $450. As you do not advice but sign with no responsibility, your signature should be free. WHY do you charge? You also do not need the money! As you said so.
There are some financial planners who think they can sign this certificate, but actually they need to be authorised to sign it in the first place. Sidneygirl, I would advice you to check with your adviser if they are authorised to advice on SMSF's. This would be in the form of a certificate from their dealer group (licencee). Their Financial Services Guide (FSG) should also indicate as to what they are authorised to advice on. Advice from a financial planner needs to be via a STATEMENT OF ADVICE (SOA).
Hi Zap.
Financial Need does not determine value, the purchaser of the product or service does.
A basic premise of life is that you dont consistently give away product or services of value - because it will be abused - guaranteed.
Many of those of financial significance, thence re position such earnings into new pro-bono or charity projects.
ta
rolf
Sure agree with your philosobpy, Rolf and thanks for life's lessons.
Only responded to the price and mode of advice mentioned by the poster. The debate was about the cost associated with signing the certificate of advice.
However, is it OK to see something that could be potentially wrong happening and ignore it! What's your philosophy on that?
Only responded to the price and mode of advice mentioned by the poster. The debate was about the cost associated with signing the certificate of advice.
However, is it OK to see something that could be potentially wrong happening and ignore it! What's your philosophy on that?
This is similar to when clients have to get independent legal advice telling them about their obligations to guarantee their $2 company's debts (for mortgage purposes). And they get charged $200-400 for the privilege of being told how to suck eggs. I can understand why clients get annoyed at this - I certainly would. It's a waste of money and adds no value. It just goes to show you that most of this regulatory stuff is just relegating professional services like lawyers and accountants to expensive insurance policies.
1500 to 2000 based on an hourly rate.
remember the corporation law states, you must know your client, you must provide an SOA
Unfortunately it's work, if I could I'd take the 400 and run i would, unfortunately what the government dictates is hours of work by a financial planner and about 4 hours work by a para planner and admin girl.
I think you might want to talk to ASIC about not providing a Statement of Advice (SOA)...I hope a fully licensed Financial advisor is also signing this off, as providing advice without a license is an even bigger no no.
As a mortgage broker you would have a conflict of interest there, as you are organising the loan and signing it off as "good financial advice". There is nothing "independent" about that. I'd even scratch my head about a bank sending clients to one of their own planners...
Back to topic...
You have to realise that you are not paying and advisor to sign a piece of paper, you are paying for his/her advice. $450 is cheap and if I wanted it signed that's a good deal. But I wouldn't want to be the advisor who didn't provide a SOA to you when the S**t hits the fan. That advisor is certainly exposing themselves to huge liability and not being adequately rewarded for the risk.
They have to consider the following:
- Is borrowing in your SMSF an appropriate strategy given your personal circumstances, goals and objectives?
- Is this investment inline with the investment stragey of your fund?
- Is this investment inline with your risk profile?
- Does your SMSF trust deed allow for such an investment?
- are there better alternatives than borrowing to invest?
- Is gearing appropriate for you?
- do you have appropriate life cover, in the event of your death or disablement or temporary illness?
- what happens to this asset in the event of your death
- do you have an estate plan?
- how is the fund going to handle pension payments when you retire
- etc, etc, etc
This would all have to go into a comprehensive statement of advice that would take at least 1-2 days of advisor time + 1/2 - 1 day para planning time + admin support time of 3-4 hours.
So $2,000 as a base is good value. If done via a bank, only a senior advisor would generally have the SMSF qualifications required to speak to you. They charge more so $4,000 + wouldn't be uncommon.
Hi Greedy me old china
I have been a Licensed Financial Planner since 1998 so think i am ok there.
I never said a SOA was not provided I merely said you do not have to charge like a wounded bull because of greed.
Both ASIC and my Dealer Group are fully aware that i am a Mortgage Broker as well as a Financial Planner.
Appreciate your advice but if you have ever read any of my API articles would now that money is not a motive. (I have enough of that).
I have been a Licensed Financial Planner since 1998 so think i am ok there.
I never said a SOA was not provided I merely said you do not have to charge like a wounded bull because of greed.
Both ASIC and my Dealer Group are fully aware that i am a Mortgage Broker as well as a Financial Planner.
Appreciate your advice but if you have ever read any of my API articles would now that money is not a motive. (I have enough of that).
SMSF Financial Planner Certificate
A little late to the party but.....
I agree with greedy2000 to a point.
I am a Planner, and I sign off on SMSF loans quite often.
Since the clients only want the advice required to sign the certificate, they scope the plan 100% to the requirements of the Certificate and nothing else. There is also no "Product" so that section is excluded.
By doing this there are just a few things that I need to do, which includes
By doing this I can keep the cost down, as the SOA I use is mostly a template, as most are, but it does that cash flow analysis for me.
For the most part I can get the whole thing done and costs about $750, which includes a 46 page SOA, Investment Strategy documented and updated and the certificate signed off.
The Signoff meeting still takes an hour, and most of that is me talking about the structure of the loans, structure of the SMSF, Risks, Cash flow analysis, Insurance requirements, Investment Strategy etc.
6 mins for advice, and no SOA? Wouldn't want to be their PI insurer.
A little late to the party but.....
I agree with greedy2000 to a point.
I am a Planner, and I sign off on SMSF loans quite often.
Since the clients only want the advice required to sign the certificate, they scope the plan 100% to the requirements of the Certificate and nothing else. There is also no "Product" so that section is excluded.
By doing this there are just a few things that I need to do, which includes
- A cash flow analysis at current rates
- A cash flow analysis at a 2% higher rate
- Review of the Investment Strategy
- Explanation of the benefits, disadvantages and Risk of borrowing
By doing this I can keep the cost down, as the SOA I use is mostly a template, as most are, but it does that cash flow analysis for me.
For the most part I can get the whole thing done and costs about $750, which includes a 46 page SOA, Investment Strategy documented and updated and the certificate signed off.
The Signoff meeting still takes an hour, and most of that is me talking about the structure of the loans, structure of the SMSF, Risks, Cash flow analysis, Insurance requirements, Investment Strategy etc.
6 mins for advice, and no SOA? Wouldn't want to be their PI insurer.
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