SMSFs are not generally appropriate in a mass environment, Mr Dunn told SMSF Adviser, since there is a required a level of financial literacy that does not necessarily suit some investors.
“If it goes too far into mainstream, it will then present issues that [the Australian Securities and Investments Commission is] concerned with at the moment … the fact that people don’t have potentially the financial competencies to be able to make the right decision,” Mr Dunn said.
“They’ll get pushed down a path where they’ll be investing in products that may expose them to risk.”
Mr Dunn said growth in the sector should be coming from engagement with the industry from those genuinely interested in and appropriately using the SMSF vehicle.
“It comes back to making sure that people are moving into it for the right reason, not because the product is there… as the carrot to get them to do it,” Mr Dunn said.
“[This] is why the whole borrowing in property piece is starting to cause a bit of friction because we’re seeing the product providers come in first, using the SMSF as the solution to sell the product.”
Anything which reduces cost,improves access and makes life easier for SMSF Trustees is most welcome. SMSF ADVISER should not listen to people who plainly have a vested interest.
most people interested enough to go to the trouble of starting a SMSF have been running their own business for years and think that the knockers are merely seeking to feather their their own nest.
Besides ongoing anecdotal evidence indicates they are doing very well and making good judgement calls.
Lets remember that superannuation funds are nothing more than an administration service. The real return comes from the investment returns. I have been in SMSF for 11 years as an adviser and believe that most people can manage a SMSF with the right advisers helping them. I agree with the majority of the comments around the poor advice or lack of advice. What we need is not more red tape but more around the education of the advisers. If one was to read the corporations act there are a number of breaches by the internet free set ups and as already stated the individual trustee has issues that I have never set up a SMSF without a corporate trustee. Trying to stop property marketers taking about SMSF is like trying to stop them giving tax advice on negative gearing. Surely recommending a property in to a SMSF should be a financial product as the members cant live in it and therefore constitutes a financial product. Why cant we have a piece of legislation around that?
Successive governments and the tax/accounting industries created this mess. When people retire and realise the ‘advice’ they were given was inappropriate, who is going to pick up the tab?
Any proof that tax/accountant industrues have created this mess? What ever ‘this mess’ is.
I guess you do realise that SMSF ‘s are not covered by the government for any losses arising from either financial planners or acountants.
However I do agree that the concept that SMSf’s are for every one with a few $’s to invest is just stupid
Has no one read their FSG. Like E-super, it’s not cheap at all. It’s simply thinly veiled commission collection system Anyone can claim to be giving something away for free when their service is riddled with commission. Isn’t this what we consumers asked to have removed from super. It seems to me CleverSuper are no more representing the interests of consumers than any other commission jockey.
Fair call Aaron. As someone who sees hundreds of super funds each week from a large variety of sources (in the compliance side of SMSF), I have major concerns with the concept that everyone and anyone should be managing their own SMSF. I don’t believe in complicating the field for the benefit of keeping anyone in a job. However, we already see many situations each week where either the Trustees, or those advising the Trustees are unaware of many of the regulatory requirements and restrictions. If every man and their dog are encouraged to jump into free SMSF self-administration, the instances of regulatory breach will skyrocket. The big end of super will have real reason to be concerned and the extra policing required by the regulators will push up the base costs of SMSF even further. The idea of free SMSF admin software is fine in itself, however the obvious question is “in what other ways will the Trustees of these funds be hit in the hip pocket?” Let’s not turn SMSF into a joke!
The notion of free SMSF setup is presumably based on the setup of a SMSF with individual trustees only. This it self is poor advice.
There is no protection for SMSFs like there is for normal fund members via the Super Stream Levy funding Government insurance – most SMSFs trustees are not aware of this. Also I fear that many people don’t make good decisions – using the home loan example is perfect… we saw someone the other day paying 6.9% where they could easily be on 5.5% presently with one form with their bank … see a dozen of these cases in highly educated people every year. Too ‘busy’ to do anything about it. Given financial penalties are the loss of 46.5% of the CAPITAL i would have concerns given 10 years of seeing how a decent cross section of the “bulk” of adults run their money lives. Not to mention at least 2 or 3 university educated adults a year telling me interest on their home loan is calculated once at the start of the loan – sheesh.
Free and to absolutely everybody is extreme but the bulk of the adult population who has a good steady job and has been successfully paying off a home loan for years can run a SMSF. You need to be sensible but not a rocket scientist and there are many in the SMSF sphere trying to dress up the “complexity” of SMSF for their own self interest.
What patronising comments. It’s already very mainstream. Successive governments and the tax/accounting industries created this mess. When people retire and realise the ‘advice’ they were given was inappropriate, who is going to pick up the tab? The SMSF industry is now promoted by many operators neither technically proficient or looking at the best interests of the client. Quite possibly the ‘Super Pandora’s Box’. We’ll all just wait for someone at ASIC one day to decide to look into it a little more and wait 10 years for it to begin to make some inroads. As usual, all too little, too late. The horse has bolted and over the hill..
Yes we only want SMSFs to be avaialable to the upper classes of society. Imagine having tax planning, wealth creation and savings happening in the lower classes!
Aaron is totally correct. I shake my head at some of the considerations for LRBs. There are be some major issues to resolve here. Should any LRB transaction require a review by a licenced planner before proceeding?
Agree totally Mr Dunn, the comments from CleverSuper are misleading and detrimental to whole industry and i would think ASIC would be very interested in this form of advertising. There are definite competencies required by trustees to enter a SMSF, you only have to look at teh trustee declaration required to be signed by each trustee. The comments by CleverSuper are not that clever.