In an update on its website, ISA advised superannuants they should have “a very keen interest and strong knowledge of the stock market and investments” if they are to start an SMSF.
ISA also suggested potential trustees should be able to ensure they will have the capacity to stay abreast of the frequent changes to SMSF rules and regulations made by the Australian Taxation Office, and point out they will need to purchase additional insurance to replace the cover they may have in their existing fund.
ISA also cautioned that SMSFs are less protected than other super funds in the event of theft and fraud, saying “many SMSF investors [have lost] their life savings when they have been the victim of fraudulent activity.
“While an SMSF might give you more control, it comes at a significant cost in time and money that you wouldn’t ordinarily pay, especially if you were with an industry super fund.
“You also have to deal with more red tape. There are strict Australian Taxation Office rules about setting up and managing your own super fund. And even if you receive incorrect advice from a professional, the ultimate responsibility for the fund still rests with you.”