Adviser labels SMSF growth ‘frightening’
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.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.