The Self-Managed Superannuation Fund Professionals' Association (SPAA) has moved to refute the 'myth' that self-managed superannuation funds (SMSFs) are being oversold by financial planners and accountants.
Speaking at the Association of Superannuation Funds of Australia (ASFA) in Brisbane, SPAA technical director Peter Burgess said there was a perception in the industry that unscrupulous advisers were convincing their clients to set up SMSFs in order to charge them a fresh set of fees.
"It seems to me that if we had a problem with overselling, we would expect to see a downward trend in the average balance of SMSFs. That is clearly not happening – the average balance and the median is increasing," Burgess said.
Another piece of evidence against the 'myth' of overselling was the lack of any increase in the number of compliance breaches, he added.
SPAA chair Sharyn Long said she believed the SMSF sector had changed, and was addressing the issue of overselling.
"You can't necessarily control everyone out there, but I think the level of compliance and the requirement to do the right thing is increasing," she said.
However, the ASFA audience was unconvinced that the myth had been adequately 'busted' by the SPAA speakers. When asked to raise their hands if they thought the myth had been disproved, only one hand went up.
Burgess also tackled the myth that SMSF members tend to be "old and rich". While he acknowledged the average balance of a SMSF was $900,000, he said a small number of very high-balance accounts skewed the data.
The median figure of $300,000 gave a better picture of the state of SMSF account balances, Burgess said.
As for the ages of SMSF members, he said 30 per cent were under 50 years of age. He added that the average age of SMSF members was declining.
Another 'myth' about SMSFs was that there would be a problem when SMSF trustees reached their mid-80s and could no longer administer their funds.
However, Burgess said this was not a problem, since under Section 17A of the SIS Act, SMSF trustees can appoint a person to administer the fund when they are no longer capable. He added that another option was to covert the SMSF into a small-APRA fund, which wouldn't mean closing the fund.
