Do advisers have a vested interest in increased SMSF memberships?
Fewer than a quarter of people who set up self-managed superannuation funds (SMSFs) do so off their own bat, with the vast majority influenced by either an accountant or a financial adviser.
That is the bottom line of research undertaken within the University of Sydney and presented to the Senate Economics Legislation Committee, with a submission by Professor of Finance, Susan Thorp, reinforcing the degree to which intermediaries had been responsible for driving growth in SMSFs.
What is more, it suggested that financial advisers and accountants could be perceived as having a vested interest in the Government’s move to change the regime to allow an increase of maximum memberships in an SMSF from four people to six.
“Over 50% of surveyed current and former members of SMSFs say that a financial professional such as an accountant or financial planner first started them thinking about setting up or joining an SMSF,” the submission said. “Only around 22% said the fund was their own idea.”
“Further, most SMSF members report relying on financial professional for support in the operation of their fund, frequently for tasks such as tax compliance, investment strategy formulation and administration,” it said.
“Thus, financial professionals who serve the SMSF sector may benefit from:
- An increase in the number of SMSFs; and
- From serving SMSFs with a higher asset value where delegation of planning and operation to financial professionals is more likely.
“To the extent that raising the maximum members allows more, larger SMSFs, financial advisers are likely to benefit from, and favour, the change.”
The submission went on to acknowledge the benefits of increasing the numbers of members of an SMSF, including estate planning benefits and economies of scale.
It came as the submission of the SMSF Association and the Association of Financial Advisers (AFA) both supported the Government’s legislative move.
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