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Investors ‘coerced’ into small-balance SMSFs

Katarina Taurian
14 January 2014 — 1 minute read

Some accountants and financial planners are providing “dubious” advice to investors while seeking to capitalise on the SMSF market, according to Owen Hodge Lawyers.

SMSF investors need a minimum of $500,000 either in their super fund or available through equity in shares or property to make the creation of an SMSF worthwhile, managing partner at Owen Hodge Rolf Howard told SMSF Adviser’s sister publication, The Adviser.

Those who do not have a minimum of $500,000 to invest may find it “very difficult” to justify the fund’s set-up and ongoing maintenance costs, Mr Howard said.

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“Some practitioners who offer financial advice don’t tell investors this as their focus is on seeking ways to increase their revenue streams to the financial detriment of their clients.

“[Unfortunately,] investors are being coerced into creating SMSFs with as little as $250,000 to invest,” Mr Howard said.

He also indicated that it is imperative to have an investment plan prior to establishing an SMSF and also to discuss the various investment options with an accountant.

“Further, a significant level of discipline is also required to effectively run a fund. Experience has demonstrated that many struggle to separate the fund’s activities from other investment expenses, including personal and business,” Mr Howard said.

Investors ‘coerced’ into small-balance SMSFs
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