Poor advice ‘rife’ in SMSF industry, says lawyer
SMSF Law and Equity Protect has praised the corporate regulator’s proposed SMSF disclosure rules, saying poor advice is a pervasive issue in the sector.
Advisers and practitioners who lack knowledge and are offering trustees inappropriate advice are an “outstanding” problem in the SMSF sector, managing director at SMSF Law and Equity Protect Shane Ellis told SMSF Adviser.
“Trustees are often really doing their best but the professionals supporting them are letting them down,” he said.
“A lot of the trustees have been with their accountant for a long period of time and the accountant is often the trusted family adviser. The accountant or other professional [often] knows very little about the SMSF space but won’t take the time to get the proper support.”
In turn, Mr Ellis said he supports the Australian Securities and Investment Commission’s proposed disclosure obligations for professionals giving advice to SMSF trustees.
“If that encourages people to say 'well, I’m not longer going to be in the waters anymore because the rules are too tight’… I think that’s a good thing,” he said.
Mr Ellis added one of the most significant legal risks for trustees when setting up and managing an SMSF is thinking the fund is entirely self-managed.
“SMSFs, they’re not self-managed if they’re properly being cared for… trustees need to be relying upon a pool of advisers who really know their stuff,” said Mr Ellis.
Mr Ellis also expressed concern about the current hype over SMSFs gearing into property, drawing attention to the relatively minor percentage of SMSFs that are investing in real estate through their funds.
“The numbers aren’t huge, and I think the hype is bigger than the numbers are. If you have a look at the risks that trustees are taking, you’ve got to have a look at statistics and facts compared with innuendo and the odd case,” he said.
Mr Ellis added it is “extraordinary” that the Reserve Bank of Australia joined the SMSF property debate, and questioned where the input goes “beyond their function”.
Shane will be presenting at the upcoming 7th annual SMSF Strategy Day and will discuss pension ruling fine print, maximising SMSF returns and paying life insurance tax effectively. To secure your early bird tickets today CLICK HERE.