Super reforms exposing unsuitable SMSFs
The new superannuation reforms have triggered underlying problems with trustees who were not well suited to SMSFs, prompting a possible exit from the system, according to one national tax network.
H&R Block Ltd SMSF director Kimberlee Brown says that given the nature of the complex super reforms and the need for trustees to be proactive in keeping up-to-date with legislation, it’s become clear there are people in the SMSF sector who “maybe shouldn’t be in it”.
“I don’t like to advocate that people need a certain member balance or anything, as long as people understand the costs that are involved and that they need to be incurred regardless of the size of the fund,” Ms Brown told SMSF Adviser.
“In terms of getting the diversity or whatever they need in their fund, it should be people’s decision. However, I don’t think [SMSFs are] for everyone and I think often there are people out there that take advantage.”
Ms Brown said while SMSFs have gained popularity due to lower costs involved in ongoing compliance, clients sometimes struggle to identify where advice is still necessary.
“[SMSFs have] become a bit of a must-have in the space. It’s been a popular thing. I think because the costs have come down in terms of establishment and ongoing compliance that it allows more people into the market,” Ms Brown said.
“But again, I go back to ensuring that people are willing to educate themselves in the space and obviously if they’re not 100 per cent over it, making sure that they’re willing to engage people that do know what’s going on and incur that cost to do so.
“I'll obviously advocate for SMSFs because that’s the space I work in, [but] it isn’t for everyone and unless you’re willing to take that role on, it may not be appropriate.”