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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
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 also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Well said Wayne and Gerard. This article smacks of self promotion. It maybe frightening to people such as this because they see control rapidly disappearing and hence, income. But there is nothing balanced or even about the article, purely spoken from one side that is pushing an agenda that to date, has been a losing agenda.0- As advisers, we inspire our clients to take control of their finances. At the same time, we need to remind our clients about various risks including scenarios that we have no control (think GFC etc). Peter Kelly, thank you for your wise thoughts.0
- LRBA makes Managed Super Fund product range non-competitive to SMSF investment options. It helps managed fund to retain HNW clients when LRAB is banned.0
- How is LRBA bad for financial planners? For FPs it just another string to the bow for use when circumstances suit the client. Do you actually understand what FPs do?? The biggest threat posed by SMSF's is to the ISF network and they are the ones fighting hardest to noble SMSF. Everyone else has the opportunity to do a decent job in the space except the ISF shonks who neither have the personnel or the skill to compete.0
- What I find of concern("concerning" is such a horrible imported usage) is the big bank life insurer who lied to my wife about continuing her disability and life cover and now writes to say they have discovered her (lost?) super in our SMSF and could they please take it over for her!0
- What is more concerning is that advisers who want to get there business name out there make generalized unfounded comments that will put doubt in regulators minds.
+1
Its called getting your 15 minutes of fame while you can Wayne :).
What is of more concern is the coalition of so many vested interests (Banking/Retail&Industry Super funds/F Planning) attempting, with malice a forethought, to fix in the smsf sector what is clearly not broken.
Hell hath no fury like the scorning of so many vested interests :)
Compliments of the season to all (yes .. including the vested interests named above :))
G0 - What is more concerning is that advisers who want to get there business name out there make generalized unfounded comments that will put doubt in regulators minds.0
- You had better add some accounting groups in there as well.0
- I'm still not sure why LRBA are bad for super? Bad for financial planners and big super funds yes but SMSF's and members no.
Also in what world do SMSF's need to be more regulated? How is this even possible? They are already the most regulated entities in the country and recent ATO audit activity in the SMSF space has only managed to uncover high levels of compliance.0 - I think the expression "make hay while the sun shines" comes into play here. Whilst many SMSFs are being established for perfectly legitimate reasons, I suspect that many are also being established to quell the insatiable love of property that seems to be a hallmark of the Australian psyche. It is an easy "sale". You have a few dollars in super that can cover the deposit and want to buy a property. Set up a SMSF and away you go!.
My fear is that when there is a prolonged downturn in the property market, and SMSF trustees come under financial stress, and the finger pointing starts, somehow the media is going to jump on this as an other legacy of poor financial planning advice. Financial planners will be implicated even though their only involvement may have been to provide a "certificate" for the lender so that settlement could proceed.0
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