For a lot of Australians, SMSFs are more of a “status symbol” than an appropriate investment vehicle, says BT Financial Group chief executive Brad Cooper.
Speaking at a Financial Services Council (FSC)/Deloitte lunch in Sydney last week, Mr Cooper said while self-managed superannuation is appropriate for many people, there are others who lack the skills and the aptitude to be able to do it properly.
“You ask them why they’ve got them, and a lot of the reasons they give can actually be achieved in a different and less risky way,” he said.
Furthermore, the possibility of SMSF trustees “getting into some trouble and blowing themselves up” represents a significant risk for the financial system, said Mr Cooper.
“How do you fund those people [in retirement]? Because it is a lot of money back out of the system again,” he said.
FSC chief executive John Brogden said there were “absolutely” people out there who shouldn’t be managing their own superannuation.
“They’re not a majority, but there are people who don’t know what they are doing and would be safer in a [larger superannuation] fund,” said Mr Brogden.
In addition, there are no compensation arrangements for SMSF trustees who are the victim of a Trio Capital-type fraud, he said.
“Not unlike the vexed issue of deposit insurance, do we require self-managed superannuation funds to … pay into a levy?” asked Mr Brogden.
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