SMSFs trust accountant advice most

Accountants were the most trusted source of financial advice for self-managed superannuation fund (SMSF) trustees, while the use of a financial adviser by trustees dropped from 2015.

That was one of the findings of ‘SMSF Insights' survey of over 600 self-managed superannuation fund (SMSF) holders jointly published and by the Financial Services Council and UBS Asset Management.

The survey found the number of SMSF holders having formal agreements with financial advisers was down from 46 per cent in 2015 to 42 per cent in 2016, while those using accountants rose from 25 per cent to 30 per cent.

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The use of advice broadly reflected the reported trust SMSF trustees had in each advice source. Accountants were the most trusted source, with 64 per cent of respondents giving them a score of between seven and 10.

More than half (54 per cent) gave financial advisers a score of between seven and 10, while 41 per cent scored family and friends highly.

Those under 45 years of age, women, and those with mid-level funds (especially $200,000 to $499,999) showed higher levels of trust in all advice sources. However, older men with larger funds were least trusting.

Launching the report at a media briefing on Thursday, head of UBS Asset Management in Australia and New Zealand, Bryce Doherty, said people often equated SMSFs to do-it-yourself super funds, while the survey showed that 70 per cent of SMSF trustees received professional advice.

"The idea that we've got a third of our super pool sitting in the hands of individuals or couples or families in self-managed super funds, and you've got someone sitting there trading in stocks and doing this type of thing, I don't think that really translates through to the vast majority of self-managed super funds," he said.

"Advice, particularly from accountants or financial advisers is quite prevalent amongst the funds that were surveyed."

Almost a third (30 per cent) of SMSF holders said having the confidence to manage their own retirement savings was the biggest barrier to setting up an SMSF (especially those under 55), while the pressure of making their own investment decisions was seen as the most challenging aspect of running their SMSF (31 per cent).

"Again I think this is quite an interesting point that people are not setting up self-managed super funds in isolation. They are receiving advice from trusted sources," Doherty said.




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The first 'S' in SMSF stands for 'self'. The whole concept is based on the self management of the funds, people are just wasting money by seeking advice, particularly investment advice. And no, it cannot be argued, that a SMSF opens up greater product selection and efficiency that isn't available through public offer funds.

Hi APL,

I'd agree that for the average punter(s) (as you can have up to four members in an SMSF) wanting a similar investment structure in an SMSF to what can be replicated in a master trust, wrap, industry fund, etc. may not be cost effective, depending on the amount of assets between the up to four SMSF members.

But what about primary producers, those wanting business real property (with or without a LRBA), a couple with an early planning retirement strategy buying their retirement home, four members with a combine asset total of say $1m? SMSF for these clients is the only way to go (and potentially the cheaper way to go).

Fortunately, we have a variety of superannuation structures in Australia (corporate funds (i.e. with DB members), master trusts (industry/employer/retail (personal)), wraps, SMSFs, etc. because one size does not fit all.

Learn a bit more about the sector before posting in the future, readers might then potentially respect your opinions.

Hi Terrance

Thanks for taking the time to respond to my comment.

The point I was trying to make, albeit in a rather ‘clunky’ fashion was the fact that the SMSF arena has been hijacked away from its original purpose. The architect of the current superannuation system was Paul Keating. He has been quoted as recently as 2013 describing SMSF‘s as merely an afterthought of his reform package in 1992. But more importantly within the same address he was quoted as saying;

“SMSFs currently represent almost 32% of system assets, a pool of $475 billion, and growing strongly. As I said earlier, generally this group has unrealistic expectations as to how much is a good return. Single digit returns sour their enthusiasm for managed funds. They think they can do better themselves. Some sophisticated investors probably can, but how many self managers have the required level of investment expertise? And by investment expertise, I do not mean falling prey to financial advisers”
PJ Keating on February 14, 2013

Here then is proof, directly from the creator of the current superannuation system, (of which you have suggested we are fortunate to have) who doubts the ability of the majority of those entering into the self management role to be able to perform at an adequate level. And Terrance, I totally agree with that sentiment. As I said, the first ‘S’ in SMSF stands for self. I don’t think I could have been any clearer.

I was actually going to dispute your response to my comments, as the points you did make, seemed to be purely opinionated rhetoric, most probably crafted in order to appear the ‘champion’ of a much maligned industry. But I will leave that to another time.

If I was to offer some advice to you Terrance, it would be to move into the 21st century with regards to your financial planning opinions; they may then be seen to have some relevance.

Regards

APL/Terrance,

I actually partially agree with both of your points.

Look I am an adviser but I can see how SMSF industry has somewhat been 'hijacked'... The thing is that the most detrimental has been by property spruikers.

The average Australian has very little financial literacy so IMO one should not be able to run a SMSF without professional advice unless they demonstrate they are capable. Self run SMSF's have been some of the worst performing funds I have seen (albeit not when run by experienced investors).

Hi APL,

Thanks for replying, especially after, rather "clunky'' first attempt as you put it.

I'm not an advocate for any sector of superannuation (or financial services), and currently have no role in the SMSF sector. I have worked in a variety of roles across all superannuation sectors at different times, and that's why I've formed the opinion that not one size should fit all, each sector has it's good points for members, in other areas they may be lacking in member needs. That's the benefit of choice (or having multiple styles of accounts in some instances). I'm not a financial planner, never will be.

Good to hear Paul Keating's thoughts from 3 years ago, though I don't think he, or the ALP/Unions have ever been pro-choice (well only if the choice from a batch of industry funds!), so I'm not really sure that proves anything you are trying to say. Investment performance is important, but SMSF trustees usually have a variety of reasons for setting up a SMSF not just for the potential of being able to compare their performance against a 70% growth fund (I highlighted a fraction of these reasons earlier).

Your view of "self'' in SMSF not ever requiring advice is ludicrous. SMSF trustees from time-to-time may need a legal opinion prior to making a decision to ensure compliance, investment advice for a portion of their portfolio, actuarial advice, etc. which is the appropriate and responsible way to be a trustee and have a compliant fund.

If an SMSF trustee had to know the entire SIS Act, tax law, and other regulatory requirements to stay compliant and never seek advice, only a handful of Australians could be SMSF trustees. I've worked with trustees of large master trusts who have had to get advice (legal, otherwise) on issues, no different to a SMSF trustee seeking advice.

Potentially read more widely than one not impartial source to learn more about the superannuation sector.

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