SMSF hype attracting ‘unsophisticated’ investors

Market hype around the SMSF sector is attracting investors who are “unsophisticated”, with some under the impression that an SMSF equates to better performance, according to Intelligent Investor Super Advisor.

The poor performance of some super funds in the wake of the global financial crisis has made SMSFs an attractive option to investors who may not have the appropriate levels of education, managing director of Intelligent Investor Super Advisor Richard Livingston told SMSF Adviser.

“Being angry and ending up getting a worse performance yourself isn’t really going to make you feel any better,” Mr Livingston said.

The Australian “love affair” with property is also attracting investors, with many believing that property is not a volatile investment, Mr Livingston added.

“In actual fact, that’s an incredibly undiversified and risky strategy. You really don’t need a whole lot to go wrong to end up with a very bad result.”

Mr Livingston claimed there is a “massive lack of engagement” generally between Australians and their superannuation, although he said that generally, SMSF members are “far more engaged than the average super fund member”.

“I think the dangerous area of SMSFs is those people who basically have been convinced by someone to move across... They sat down with a financial adviser or some other form of product salesman and had been convinced that the SMSF is the way to go,” he said.

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