Moran Howlett Financial Planning principal Cameron Howlett said his advice firm is constantly inundated with calls and emails from large property developers offering significant commissions for spruiking property to clients.
“They’re talking about 5 or 10 per cent commissions off the plan – it’s just ridiculous,” Mr Howlett told SMSF Adviser.
“There are probably a few advisers out there who have shifted into that space because it’s the next way of making a quick, easy dollar, which absolutely drives us nuts.”
At a recent event held by Partners Wealth Group, ATO director for SMSF risks and products, Nathan Burgess, said the ATO has also seen evidence that this is still occurring within the financial advice and accounting industries.
“ASIC has warned that such commissions or benefits may be conflicted remuneration and that financial advisers may be banned from receiving them,” said Mr Burgess.
Mr Howlett added that he has had many individuals come to his firm who have gone down the path of setting up limited recourse borrowing arrangements, establishing the bare trusts and then realising it is not the best idea to have excessive debt in their superannuation fund.
“I think that’s been a legitimate concern for a lot of practices in the industry for a while because we’re seeing it at the coal face,” he said.
First thing to say is this is bad and should be stopped.
Second thing to bear in mind though is it is not actually unique to SMSFs. These spruikers are just as happy to sell an apartment to a clients trust, company or directly as they are their SMSF. Indeed the SMSF is probably the hardest sales process for them, it’s just they have realised there is a pot of money there.
So yes the spruikers do focus on SMSFs quite a bit, but if SMSFs did not exist property spruikers still would.
Real issue here is COMMISSIONS!!!