SMSF advice largely scaled

23 February 2021

The financial advice industry has a confidence issue when it comes to providing scaled self-managed superannuation fund (SMSF) advice, according to BT.

BT head of financial literacy and advocacy, Bryan Ashenden, said during the SMSF Association National Conference that the industry was on the right path to provide SMSF scaled advice and that none of the regulatory guides, research papers, or Australian Securities and Investments Commission (ASIC) reports said it could not be done.

“The question has to be why don’t we? There is no doubt that there is a confidence issue that sits here. It’s not the confidence in ‘I don’t know if I can provide scaled advice or not’ but a little bit of saying ‘I know I can do it but I just want have the confidence that somebody is not going to come back at me after it’ that ‘I’m not going to have client raise a complaint to say well you should have thought about other things or have licensee say you should have thought more or a regulator say you should have thought more’,” he said.

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“It’s probably a little bit of a legacy that we’ve got from the Royal Commission where the question was raised about did we really go far enough and do we look at enough things. The FAESA [Financial Adviser Ethics and Standards Authority] code also added to a little bit of the lack of confidence in this space.

“That’s a big issue that we need to address. Hopefully the [ASIC] consultation process is going to help us get there at the end of the day.”

A poll during Ashenden’s session found 22.8% of advisers provided scaled/limited advice in the context of SMSFs, 38.6% said they occasionally did, 22.8% said they rarely did, and 15.9% said never.

He noted that if advisers were advising the trustees of a fund, it was in a sense always going to be scaled or always going to be limited as the advice to the trustees were only matters related to the SMSF.

“You don’t need to be talking about anything else, in fact you can’t because why would you be talking to the trustee of a fund about something that’s got nothing to do with the SMSF. If it’s about a member’s investments that happens to sit in a non-super environment it’s not appropriate to do it,” he said.

“In that sense I actually think that quite often you’ll find that when it comes to SMSFs and particularly when you address it to the trustee that your advice will be scale because that’s what you can talk about.

“I think it’s also worth thinking about though that when your advice is to the member because of the confusion that often does arise in a SMSF perspective because of the complexity SMSFs do bring in. Think about if is it appropriate to keep that advice that relates to the SMSF separate from anything else.”




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I just did a small adjustment to a clients insurance in their SMSF, reducing the premium 14% or by $300 per annum in this case. My licensee told me I need to do cash flows to show the impact of the reduction to the clients end balance despite it being a reduction!! On an account balance north of $500K. This is why the AFSL's need to go and ASIC with them if they really believe that is in the interests of clients, at the cost of advisers. Its become embarrassing to be part of the industry.

"...why would you be talking to the trustee of a fund about something that’s got nothing to do with the SMSF", really Bryan? I respect you and your work but this is not what happens.

Clients to not draw a distinction between themselves and their SMSF, in their mind it's "theirs".

SMSF's pay pensions, they accept BDBN's, the tax components of different superannuation interests impact death benefit payments to different beneficiaries.

My reading is all these matters come under standard 6 of the FASEA code and therefore cannot be ignored. Therefore under the Standards these matters do require advising outside of the pure SMSF environment.

ASIC and treasury and gov't's in general have tied advice into one giant slip knot. The harder you try and pull to make things work the tighter it gets.

FASEA Stds Authority is gone (not soon enough), ASIC and treasury need to be told to take a step back, a true professional standards body should be established and monitored by a diverse board and one that is dominated by actual practitioners, not goody two shoes academic idealists, or publicly funded left wing private enterprise haters who have no idea.

Once we have an appropriate governance framework with principled based regulations not stipulated process can we start to think and scaled advice and all the other impediments to affordable or scaled advice.

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