Welcome to 2019 and what a year it is going to be with a 99% chance of a change in Government. I gave my predictions in my New Year’s blog but now comes the hard part, deep diving into them and coming up with strategies for clients. That is what they are paying advice for not – constant compliance bills. And I don’t know any accountant or financial planner who doesn’t love coming up with great strategies for clients, and there are so many know.
In upcoming blogs and at the I Love SMSF Strategy Seminar across Australia in March 2019, we will be doing a lot of strategy, lots of setting in place structures to cope with the Labor Party policies plus the super exciting new world of Bloodline Planning. To see more details simply go to www.ilovesmsf.com.
I thought I would start off my new year’s blog with a look at the new CPD laws. Not guides, Association requirements but the Corporations Act 2001 laws where a breach can cost an adviser not only fines but also a loss of their financial adviser status. Something to be on top of methinks ……
The New CPD Laws from 1 January 2019
The Financial Adviser Standards and Ethics Authority (FASEA) is a government body that has powers to make laws called delegated legislation. This seems to have been missed in a lot of discussion. FASEA is a LAW unto itself. In all my years in financial and tax law I have rarely seen a body been given such wide legal powers. To be fair, FASEA has consulted widely before making its laws but it worries me in the long term as there are no real checks and balances such as the Senate. You can’t lobby the government for changes because the government has ceded its power to FASEA. They are the kings of Advice and Ethical Standards for financial services professionals. So, we need to take great care to not dismiss or ignore their laws. At our SMSF Strategy Seminar we have Bronny Speed, the queen of FASEA, making a guest appearance to provide a quick guide on how FASEA will impact you personally and your business and what needs to be done by when. As an adviser to CAANZ and the industry, no-one knows FASEA better than Bronny.
One of the major new FASEA laws deals with continuing professional development – CPD as we financial services professionals know it. See https://www.fasea.gov.au/fasea-releases-continuing-professional-development-legislative-instrument/.
First off, the problem with CPD is we that have spent countless years meeting CPD points requirements from various Associations to in turn meet their membership requirements. For many it was a point of turning up to a conference, going in and out of sessions (ghosting sometimes) and racking those points up. For some conferences, double and triple points were awarded for each hour spent. Happy days. And then the Royal Commission came along and when Sam Henderson, a member of the SMSF Association and also the Financial Planning Association, was caught providing inappropriate SMSF advice. Out of that, FASEA was born and now we have legal CPD HOUR requirements. No triples or doubles plus they are in specific categories never seen under the Association membership requirements.
FASEA’s legislated requirement for CPD, to be monitored by licensees, is as follows:
Advisers are required to complete 40 hours of CPD each year of which 70% will need to be approved by the licensee (including a maximum 4 hours of professional reading). The minimum hours for CPD categories are:
- Technical – 5 hours
- Client Care and Practice – 5 hours
- Regulatory Compliance and Consumer Protection – 5 hours and
- Professionalism and Ethics – 9 hours
The balance up to 40 hours will consist of qualifying CPD.
So, from hereon in, the deal is as a financial adviser, you must look at hours when it comes to CPD and see where it fits into one of the categories above. For example, doing 18 hours at an Association conference that is all technical means you have met your five-hour Technical requirement but still have another 35 hours to go. If that has cost you $2,000 for five hours of CPD, then that is very expensive CPD – $400 per hour. You could get a personal financial services educator to come and train you and all your staff in-house for that sort of money.
Subsequently, you can see how this changes everything!
From our perspective at I Love SMSF and our offshoot, the SMSF Training Group, we create real CPD hours that meet FASEA standards. Our upcoming SMSF Strategy session with Bloodline Planning has 3 CPD hours which include one hour of client care and practice with Bloodline Planning and two hours technical with the strategy side and building strategy documentation. Plus, it has one hour of professional reading material. Now for the early bird price of $75 for four real hours of CPD, that’s $19 per CPD Hour. I’ll also be taking this opportunity to launch my new documentation platform, LightYear Docs – 2 years in the making, and exactly as the name describes… simply light-years ahead of any others on the market.
Personally, I am excited for the changes as laws beat self-regulation every time. History shows that. There have been too many ways to bend and shape CPD in the past – ghosting being one of them. No longer. We are now living in a new professional world that has real consequences and for SMSFs, with an incoming Labor government that is not predisposed to SMSFs, we have to change and change quickly.
P.S. If you want to know more about our memberships and how I Love SMSF can help your business or firm to meet the CPD standards with quality but inexpensive CPD hours contact Phil Manhire – email@example.com and he can take you through some of our options and maybe you can twist his arm to get some discounted tickets to the upcoming SMSF Strategy session.
P.P.S. I did some in-house training for an accounting and financial planning firm in Adelaide the other day – Johnston Grocke Business and Financial Advisers and we spent two hours going through Bloodline Planning which was Client Care and Practice CPD hours. And of course, we had a lot of fun then building structures and strategies for it in our one hour Specialist SMSF CPD.
– Stay Strategic!
CEO I Love SMSF & LightYear Docs