Self-managed funds are best suited to funds with a balance “north of $500,000” and for those who have financial competencies to invest independently, Ian Martin, vice chairman, Asia Pacific, at Berkshire Capital told SMSF Adviser.
“I think SMSFs work for people with a certain threshold level of assets or people who are likely to get to a certain threshold level of assets within a reasonable timeframe,” Mr Martin said.
“There is an argument that [trustees] can use an adviser… but I think in general [SMSFs] are for people who have a reasonably high degree of literacy around financial matters and around the legal and accounting issues that running an SMSF necessarily involves,” he added.
“I think it’s overly simplistic to think that you can set one up and delegate it to somebody…without an understanding of the responsibilities of being a trustee.”
Mr Martin also recommended a review into borrowing as per the Cooper Review’s advice, drawing attention to “disconcerting” sales practices and anecdotal evidence that gearing into property has increased.
“It would be prudent for the authorities to go back and take a look at the Cooper Review recommendation and actually undertake that inquiry,” Mr Martin said.
“I’m not suggesting another Cooper Review, but I think for example the Treasury ought to be taking a look at the asset allocation numbers… and see how big an issue this is.”
“I personally think the sector would benefit from stability rather than constant change, but nonetheless, the reality is that from time to time situations change and new products develop, circumstances change and given that that’s the case… there are things that are prudent to look at.”
Use of a SAF is a simple solution even with LRB.
First you have to stop administrators who are offering SMSF admin for free – to earn certain bps on money deposited in a bank or a margin on brokerage or commission in selling insurance….
He said if the fund had passed the ATO compliance procedures, the financial adviser should regard that as a positive sign their clients were suitable to be SMSF trustees. Some hundreds of funds have not proceeded as a result of those questions. So if your clients are all getting through that process, thats great. Some people arent, he said.
So the ATO aren’t too fussed about the suitablity of trustees why are the ISN & others like Mr Martin
Sounds like vested interests talking here!
What nonsense this man talks.
Paternalistic regulators again. Let us save the world.
Not everyone is a naive idiot even if they only earn $100,000 per year.
There seems to be no end of know it alls who think they know better than SMSF practitioners
All levels of the finance industry should act in the best interest of their clients and only recommend an SMSF when it is actually the best solution for the client.