ASIC to look at cost of SMSFs

The Australian Securities and Investments Commission (ASIC) has outlined a range of factors it believes are important for financial advisers to discuss with their clients before setting up a self-managed superannuation fund (SMSF). 

The list of factors has been outlined by ASIC commissioner Greg Tanzer during an address to The Tax Institute and followed his outline of the work carried out by ASIC's SMSF Taskforce, particularly with respect to the quality of advice provided around the establishment of funds with $150,000 or less in member account balances. 

The issues Tanzer said financial advisers and their clients needed to discuss with respect to establishing an SMSF included: 

• the roles and responsibilities associated with being a trustee of an SMSF 
• the time, cost and resources required to run an SMSF 
• the risks associated with an SMSF structure (ie, not having access to a government compensation scheme) 
• whether the investor has the necessary skills and expertise to make investment decisions for the SMSF 
• the importance of asset diversification 
• whether the investor's investment strategy will deliver the returns required to adequately fund their retirement; and 
• the advantages and disadvantages associated with a switch from an APRA-regulated fund. 

Tanzer said that as part of the next stage of work by the SMSF Taskforce, ASIC would be releasing a consultation paper that would propose the implementation of specific disclosure requirements to improve the quality of advice given to investors. 

As well, it said the consultation paper would include a research report from Rice Warner Actuaries dealing with the costs of operating SMSFs. 

Originally published on SMSF Essentials.

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