In a recent media statement, Investment Collective managing director David French said the statistics provided by ASIC in its fact sheet Self-managed superannuation funds: Are they for you? contained “seemingly deliberate inaccuracies”, particularly around the expenses involved in running an SMSF.
“ASIC claims that the average cost of running an SMSF is $13,900 per annum — the data apparently came from the Productivity Commission, but ASIC has made no attempt to explain that this average is distorted by the costs of some very large funds, and has not been considered in relation to the services that are included for the money,” Mr French said.
“In my experience, costs specific to running an SMSF rarely exceed $1,500 per annum.”
He added that figures used in the fact sheet showing APRA funds outperforming SMSFs in a number of cases could not be relied upon for an accurate comparison, given the varying risk profiles and objectives of SMSF members.
“ASIC knows it’s on shaky ground in reporting Productivity Commission return figures for SMSFs, that’s why it has included a footnote to cover the inadequacies of the data,” Mr French said.
“Such data is distorted by any number of factors peculiar to the individual fund and is not suitable for the calculation of performance figures. In particular, many investors are conservative by nature and they often prefer higher weightings of lower risk assets.”
In a recent blog post, SuperConcepts executive manager of SMSF technical and private wealth Graeme Colley also pointed to the performance statistics as misleading, saying the ATO data used by the Productivity Commission could not be used to make an “apples for apples” comparison.
“It is recognised that comparing costs of running SMSFs needs to be made more transparent so that each type of fund can be accurately compared,” Mr Colley said.
“The comparison issue is ongoing, but the ATO statistics for SMSF recognise that it is not possible to compare APRA-based funds with SMSFs.”
Mr Colley said the data around underperformance of SMSFs with a balance of under $500,000 was particularly deceptive, as only a very small minority of funds fell into this category.
“The report from the commission states that SMSFs with balances of less than $500,000 produce lower average returns. It would have been useful to recognise that the average balance of an SMSF, usually with one or two members, is about $1.223 million,” he said.
“ATO statistics say that, in total, there are only about 8 per cent of funds which have balances below $500,000.”
I feel there needs to be a broom put through ASIC. They really are a joke stating such rubbish.
i am not sure costs of $1500 is indicative of a tax agent and auditor overseeing a super fund. i have fees of 5500 on a fund with 900k with a dozen shares and 3 managed funds. am i being taken for a ride?? i might add these costs are deliberately in place because we are not trusted by the tax office/industry oversite organisations etc. i can do the tax return at 100% accuracy as a retired financial person but am treated as a potential crimanal un worthy of being honest in completing the process. the system is heavily weighted against us.
Hmmm, methinks you are being taken for a ride. Absolute maximum for that type of Fund should be less than $3k!!
I operate in this space and I would have thought that $3k (plus GST) for admin and audit would be about right for this mix of investments.
An average of $1,500 is too low, this would be the absolute minimum for a fund that held only cash for the year and paid some tax / accounts. This includes an audit also.
I’d like to see a breakdown of the $13,900.
Once again ASIC has proven it cannot be trusted, time for a cleanout. How about ASIC investigate the corruption involved in Industry Funds, oh sorry they are best mates.
The question has to be asked in this time of best interest and disclosure as to how regulators writing guidance material that by their own admission is (by the nature of the complexity of the comparison they are trying to make) misleading, is in the best interest of investors/superannuants who are trying to make an informed decision. They need to be held accountable for the inaccuracies they publish and a simple disclaimer of the shortcomings doesn’t cut it. If the comparison is too complex to make, then don’t make it.
Imagine a Financial Adviser manipulating investment performance figures and Fees / costs in their SoA to clients = Lifetime ban from Financial Advice from ASIC.
Yet the same ASIC seem to think it is fine to push their left wing, pro Industry Funds / Anti SMSF agenda with manipulated performance and cost figures.
Really truely insane behaviour from a regulator absolutely smashed for its performance at the Royal Commission and struggling to find any sense of reality.