In a statement released on Monday, SMSF Association chief executive John Maroney said while the association agreed that SMSFs were not suitable for every client, the data used by ASIC in its fact sheet “Self-managed superannuation funds: Are they for you?” distorted the costs involved in running a self-managed fund.
“We take issue with the representation that the typical cost of running an SMSF is $13,900 a year,” Mr Maroney said.
“The use of averages ignores distortions from very large SMSFs and those who choose to use extensive administration and investment services.”
He said the association would seek further clarification from ASIC on its use of this figure in the fact sheet, given that industry data indicated the annual expenses involved in running an SMSF could be as low as $5,000.
In addition, the SMSFA took issue with the regulator’s claim that SMSFs with balances below $500,000 underperformed APRA-regulated funds, given it was hard to make an accurate comparison between the two.
“For example, SMSF establishment and advice costs vary considerably to the costs incurred by APRA-regulated funds, in the process materially distorting SMSF returns, especially for new and lower-balance funds,” Mr Maroney said.
“We also argue that the cost-effectiveness debate must be extended beyond a mere analysis of net returns and costs and consider the cost of running an SMSF over the long term, as well as the varied motivations that SMSF members have in setting up their own funds, such as increased control and their individual retirement goals.”
The comments come following ASIC’s announcement of a forthcoming pilot program to send its newly published fact sheet on SMSFs out to all new SMSF trustees in November.
The fact sheet is aimed at getting trustees to consider whether an SMSF is appropriate for them, following concerns from the corporate regulator that the volume of assets in the SMSF sector may be growing too fast.
No different from every other report ASIC has done in the past 5 years — write the press release and then make sure the figures match what you have written.
ASICk Joke has a mandate to assist union funds. They have literally indicated this throughout the last few years, but pointedly so via their outright endorsement of them at the Royal Commission and admission they have never undertaken any investigation.
The Unions have also openly stated in the media they’ve specifically targeted to reduce or eliminate SMSF’s.
This, ladies and gentlemen, is simply ASICk Joke doing their bit to progress that goal.
Wasn’t it ASIC who were fining companies $10K+ for having a few words wrong on their websites re the benefits of having an SMSF? Websites the potential trustee is not forced to visit and who is perfectly capable of doing their own research? How much should ASIC be fined for providing blatantly incorrect information direct to a trustee?
People have to think back & recall what lead to SMSF popularity. The lack of trust due to fund manager & life office excessive fees of 25-30 years ago & poor returns caused people to shift to take control in droves. You cannot blame them, as once they realised their retirement security was at risk, they acted to change their destiny. Those people would prefer to make a poor return under their own hand rather than risk it to those that gave them good reason not to trust them. It’s their choice…. or is it? Will the govt mandate choice next? How far does this all go?
Sending out a fact sheet to all new SMSF trustees warning them that an SMSF may not be for them seems a bit like shutting the gate after the horse has bolted! …ahh but that’s ASIC all over isn’t it?
The annual running costs and time requirements claimed by ASIC (and even the SMSFA) are total BS. I’ve run our own SMSF for more than ten years and it costs about $1,060pa ($800 for esuperfund annual admin/audit fee + $259 for the ATO rip-off SMSF fee) to ‘run’ our SMSF, and it only takes me about 4 hrs to do the annual ‘paperwork’ (completing the online questionairres relating to our SMSF bank tran identifications and providing the annual tax, investment and distribution statements for the one diversified ‘high growth’ index fund of funds we invest in, and reviewing/updating our investment strategy).
So, with three SMSF members, this works out to under 1.5 hrs and $360 per member to invest via an SMSF. And investing in one index fund means that the investment fees average about 0.40%.
Its time for ASIC to ‘get real’ about the minimum cost of running an SMSF. Sure, an SMSF with real estate investment(s), share trading with multiple dividends and capital gains events occurring each year etc. will cost a lot more, but that is not the ‘minimum’ cost to run an SMSF.
Agreed in Full.
Well done SMSFA, if a financial adviser was to make this statement we would be punished for misleading conduct. ASIC senor executives for superannuation needs to be sacked for promoting misleading information to the public.
Spot on, I opened an SMSF 5 years ago now and it started with 120k and is now 400k by direct share investing and annually pay $1500 in fees excluding tax. I will buy a commercial property soon for my own business to operate from.