SMSFs are growing at concerning levels and are in many instances being established without client interests at the forefront, according to the founder of one advice firm.
Speaking to SMSF Adviser, Adapt Wealth Management’s founder Reuben Zelwer said the “growth of SMSFs is frightening” with the number of trustees now at over one million and the number of SMSFs at over half a million.
Mr Zelwer said advice businesses focused solely on SMSFs are “dangerous” for the industry, if every client walking through the door sets up an SMSF whether appropriate or not.
“I get very concerned about the growth of groups out there masquerading as financial advisers but all they do is set up self-managed funds, and help clients buy property off-the-plan, and arrange limited recourse borrowing,” he said.
At some point in the future Mr Zelwer said “this will come back to bite the industry”.
While SMSF investment in property he said is only growing fiercely in very small pockets of the industry, clients that do have these sorts of strategies will see a “real soft spot going forward”.
Mr Zelwer said anything that has grown at the rate of what SMSFs have is likely to be a target for regulation and that the SMSF industry should be prepared for that.
“It looks like there’s a very good change, limited recourse borrowing is going to be taken away,” he said.
“The ATO obviously now has some more administrative powers in dealing with SMSFs so the question is going to be how they enforce that and if they have the manpower to enforce it,” he added.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all