Podcast raises questions about super funds’ ability to offer unbiased advice

The show began with Ms Fuchs outlining that the topics discussed are “general advice only”, adding more weight to what she had to say given her role at the $260 billion fund.

“I think a lot of people hear self-managed super and think, well, I did my own bathroom in the house, or I did my own renovation, maybe I can do my own super?” Mr van Gestel said in the podcast.

Asked by Ms Fuchs whether “Australia's obsession with property” plays into the high demand for SMSFs, Mr van Gestel said “there is this sexiness” about getting property with super.

“But it's not that easy. You tend to see that fees for a self-managed super fund will start at about $2000 and go up from there. So, people tend to realise that it’s more expensive than maybe I set out on,” he said.

“Secondly, when it comes to the amount of work, I think people think, yeah, I’ll set up a self-managed super fund, buy property, whack it in and off we go.”

Ms Fuchs then reminded that someone looking to set up an SMSF would also need to consult an accountant or an adviser, which, she implied, adds to the complexity.

“It becomes complicated before you even start,” Mr van Gestel added.

Noting that “ordinary super invests in property too”, Ms Fuchs also warned of the “hidden traps” in SMSFs.

“I'm thinking about the hidden traps and investing and the recourse if an investment goes wrong in the context of an SMSF, where someone sees an ad in their local newspaper about an investment that's generating a certain return, they put their money in and then it vanishes,” she said.

While blasting SMSFs, the podcast highlighted the benefits of using a large, APRA-regulated fund like ART, with the pair arguing that individuals have more “recourse” in large funds.

“Large super funds pay a levy to government, and that levy ensures a government guarantee that in certain circumstances where there's a failure of investment, or a failure of fund, there is actually some recourse there for members. With a self-managed super fund that's not there,” Ms Fuchs said.

The pair also highlighted the benefits of diversification in a fund like ART.

“I think a lot of what we say with a self-managed super fund, we’ve talked about property, but a lot of people will invest in maybe the top 100 shares on the ASX, or they will invest in a really narrow range of assets. But it isn't providing that diversity again that I think people really need,” Mr van Gestel said.

“If I'm with a large fund, then that's going to give me access to a whole range of properties, a whole range of infrastructure, a whole range of unlisted investments.”

‘Very siloed thinking’

Speaking to SMSF Adviser, Aaron Dunn, CEO of Smarter SMSF, said if ART wanted to have a constructive debate about the merits of SMSFs, the sector is now mature enough to admit that SMSFs are not for everyone.

“However, the response that SMSFs are too hard and difficult when we know there are people who are totally appropriate is very siloed thinking,” he said.

“From our side we wouldn’t be sitting here as an industry and saying the only thing to do is move all your super from an SMSF into an industry fund.”

Liam Shorte, financial planner, SMSF specialist adviser and director of SONAS Wealth, said super funds are meant to give unbiased advice and the Quality of Advice Review (QAR) reforms were designed to create a level playing field.

“In this podcast, the superannuation expert doesn’t deal with day-to-day superannuation needs and does not understand asset allocation and investment that now exist in SMSF,” Mr Shorte said.

“He is saying that it is hard to diversify in an SMSF but with ETFs now SMSF trustees can get diversification across the world. I was upset that the podcast was only looking at all the negative points. Things have moved along. SMSF costs are lower, and you can manage one for as little as $600 and year up to $6000, depending on your needs.”

David Busoli, principal of SMSF Alliance, likened the comments in the podcast to “asking a vegan what they think about steak”.

“We know SMSFs aren’t for everybody and the points that were made in the podcast were largely valid but there was no counter argument,” he said.

Large super funds are fighting to keep members with a recent Roy Morgan poll showing SMSFs have a greater level of satisfaction than industry funds.

Additionally, ATO data on the SMSF sector from the 2023 September quarter indicates there has been a large increase in SMSF establishments, especially in people in the 40-54-year age group, attracted by the level of control they can have over their investments.

According to the 2023 Class Annual Benchmark Report, more than 52 per cent of new SMSFs in the 2023 financial year were established by people aged between 42-56 years with Millennials (24-41 years) making up the second largest cohort at 23.7 per cent.