Prospective SMSF trustees should be wary of free establishment services, the SMSF Professionals' Association of Australia has warned.
SPAA’s Graeme Colley said while the concept of ‘free establishment’ is not wrong, “there’s no such thing as a free lunch”.
“It may be linked to an SMSF borrowing or may be used as a ‘catch’ for a more expensive ongoing service that locks you in,” Mr Colley said.
“Although establishing the SMSF may be free, the ongoing costs may be higher than what is available elsewhere in the market. Remember, too, some of these ongoing services may be available on a user-pays system,” he added.
“[Trustees] also need to consider the extent of the service, flexibility and depth of what is being provided as well as comparing the overall cost of administering the fund, and not just the cost of setting it up.”
SPAA’s comments follow CleverSuper’s offer of a free SMSF “to every Australian”, with chief executive Chris Appleyard saying the notion of a minimum asset base entry barrier is outdated.
“The idea that you need a certain amount in investible assets or whatever is old thinking – we need to throw that idea out the window – you can have an SMSF with 20 bucks in it if you want,” Mr Appleyard told SMSF Adviser.
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