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Scaled advice the future for SMSFs

Scaled advice the future for SMSFs
Tony Zhang
18 February 2021 — 3 minute read

SMSF advice is already much like the concept of scaled advice and can be the future for the sector, but numerous regulatory guides have muddled the waters on defining scaled advice, says a technical expert.

Speaking on the SMSF Association National Conference 2021, BT technical services expert Bryan Ashenden said that as the consultation of scaled advice progresses, it will be about looking at it from another perspective of what defines giving advice in the fund.

The comments come following ASIC’s recent industry consultation around RG 90 and RG 244, around the barriers to affordable advice, with the regulator having urged more licensees to offer scaled advice following research that the majority of consumers wanted to receive advice in episodic form.


Mr Ashenden said when looking at SMSF advice, it is usually about addressing all of your advice to the members themselves and not really ever addressing advice to the actual trustees of the fund.

“When you think about it, when you’re advising the trustees of the fund, it is almost in a sense always going to be scaled or always going to be limited, because if youre giving advice to the trustees of the fund, you can only be talking about matters that are related to the SMSF,” Mr Ashenden said.

“You dont need to be talking about anything else; in fact, you cant because why would you be talking to the trustee of a fund about investments thats got nothing to do with the SMSF and sit in a non-super environment.

“In that sort of sense, I actually think that quite often youll find that when it comes to SMSFs and particularly when you address it to the trustee, that your advice actually will be scaled because thats what you can talk about.”

Mr Ashenden noted it was worth thinking about how the advice is given to the member because of the confusion that often does arise in an SMSF perspective and the complexity that SMSFs do bring in, whether it is appropriate to keep that advice that relates to the SMSF separate from anything else.

From a regulator perspective, Mr Ashenden said it comes down to examining how possible it is to give scaled advice, but the numerous consultation papers and regulatory guides have muddled on what concept is being raised on scaled advice.

“It is a bit like playing a game of bingo because over an extended period of time we have seen a number of regulatory guides, reports and consultation papers coming through and often it can be hard to keep track of which concepts relate to which paper,” he said.

“Weve heard from the government that they want to look at ways to try and reduce some of the complexities and reduce some of the red tape that gets in the way of being able to effectively provide advice through a cost-effective manner through to clients, so I do think we are all on the right path.

“The other issue though is if we take a look at these regulatory guides and the research papers or the reports that ASIC has done in the past, theres nothing there that says that we cant do it, so the question has to be, why dont we?”

Mr Ashenden believes that this has undoubtedly created a confidence issue for SMSFs to provide scaled advice.

“Its not the confidence issue where its about, ‘I dont know if I could provide scale advice or not’, but its this bit about the confidence of, ‘I know I can do it, but I just want to have the confidence that somebodys not going to come back at me after it’,” he said.

“This is probably a little bit of the legacy that weve got from the royal commission where the question is raised about if we were going far enough for the progress in advice and if things like the FASEA code also added to a little bit of the lack of confidence in this space.

“I think that thats a big issue that we need to address and, hopefully, this consultation process that were going through is going to help us get there.”

Scaled advice the future for SMSFs
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