Two bodies representing industry super funds have called for improvement in the quality of advice provided to clients, questioning some of the drivers behind the growth of self-managed superannuation funds (SMSFs).
The Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) have lodged a joint submission to the Australian Securities and Investments Commission (ASIC) Consultation Paper 216, which discusses advice provided to SMSFs, specific disclosure requirements and associated costs.
The two associations expressed support for an enhanced regulatory regime that imposes an obligation on financial planners, accountants and others who provide a “critical entry point on the establishment of SMSFs”, which they said would ensure clients made an informed decision.
They pointed to ASIC’s review of advice provided to SMSF trustees, which highlighted that only one piece of advice was characterised as good, with close to 30 per cent being deemed poor by the regulator.
“There is a clear need for improvement in the quality of advice provided to clients,” the submission said.
“The proposed disclosure requirements in the consultation paper will go a long way to improving the quality of advice.”
AIST and ISA also expressed concern about the so-called “push or pull” factors in the establishment of an SMSF and the aggressive marketing of SMSFs as a vehicle for property investment.
The submission stressed it was not only property spruikers who were encouraging clients to invest in property using this method.
“SMSF seminars and wide-scale advertising by service providers are promoting the establishment of SMSFs,” the submission said.
“There is to date no adequate published survey of SMSF trustees which analyses the main drivers behind the rapid growth in SMSFs,” the two industry bodies added.
“There is a need for work to be undertaken which informs policy makers and regulators and ultimately adds to policy formation which would assist SMSF trustees and those considering the establishment of a self-managed fund.”
