The Financial Services Council (FSC) and the SMSF Professionals’ Association of Australia (SPAA) have labelled the cost findings provided by Rice Warner on the costs of self-managed superannuation funds (SMSF) as anecdotal generalisations.
In their submissions to the Australian Securities and Investments Commission (ASIC) on Consultation Paper 216, which covers costs within SMSFs, SPAA said it “was surprised by the report’s findings on when SMSFs are cost-competitive with retail or industry funds”.
SPAA chief executive Andrea Slattery said the Rice Warner numbers were higher that what SPAA understood to be common in the area of SMSF administration.
Slattery claimed that the higher costs quoted by Rice Warner pushed up the point at which SMSF funds became cost-competitive with other superannuation vehicles and might mislead SMSF fund trustees.
“Because of this we do not think that these calculated break-even points should be used as being indicative of the costs of running an SMSF. The most common cost, such as the median or most common cost, could be used as a more useful guide,” Slattery said.
SPAA also claimed the costs associated with the calculated break-even points in the Rice Warner figures ignored the unique and individual nature of SMSFs, including the fund’s investments, the level of self-administration conducted by the trustee and the administration platform in use.
This cost issue was also identified by the FSC, which stated that the Rice Warner research report was only anecdotally representative of the industry views of costs.
“However, it is important to recognise the costs are generalisations only, as costs will vary fund to fund, between service providers, depending on underlying assets, whether platforms are used for example,” FSC stated in their submission.
Both groups also steered away from ASIC setting binding guidance on costs with SPAA, stating the issue of costs could be resolved by trustees having access to appropriate advice so they can understand the implications of having an SMSF.
FSC stated its preference was for any guidance on cost to focus on the type of costs an SMSF might incur and not on actual costs, unless these were specifically known for a client.