SMSFs – Ensure you get the RIGHT advice from the RIGHT professional
FACT: in 2017, SMSFs accounted for 32% of superannuation assets
FACT: In the last 5 years, the number of SMSFs has grown 27%
FACT: Many Australians get SMSF advice from the wrong people and/or professionals
Highview are considered a large SMSF firm, providing set-up and advice for over 410 SMSFs annually. In comparison to other firms of our size, this is a huge number! As a business that specialises in SMSFs we cannot stress enough the value of experience and good advice when it comes to SMSFs. If you’re looking for a professional to assist you with a SMSF, it’s imperative they have the appropriate Licencing, Authorisations and Auditors.
Speaking with professionals at Highview that are ‘Authorised Representatives’ or ‘Limited Authorised Representatives’ ensures you get up-to-date, appropriate and considered SMSF advice that’s tailored to each client’s individual circumstances. We too have our own trusted independent SMSF auditor. The appropriate Licences and Authorisations are applied for through and approved by the Australian Securities & Investments Commission (ASIC) – Australia’s governing body.
We could bang on about this for days, but we think Bryan Ashenden, head of financial literacy and advocacy at BT Financial Group, has outlined the key points perfectly in his article “How to get the right advice for your self-managed superannuation fund, or SMSF” which we’ve provided below. Alternatively, you could join Highview experts Silvio Marinelli and Bruce Chisholm at our upcoming FREE SMSF Seminar on 22nd August – view details here.
Further reading written by Bryan Ashenden…
If you are an avid reader of columns like this that often talk about the opportunities and risks associated with running a self-managed superannuation fund (SMSF), one of the recurring themes you may notice is the need for professional support. The question then becomes: how do you get it? Many people may define a successful SMSF as one that generates a higher than expected level of return from the investments. This involves having the right investment expertise, combined with a positive market. However, a successful SMSF should not just be viewed as having chosen the right investments. In many cases the same investments may have been available to you through more traditional super funds, such as those offered by larger financial institutions, industry funds and some employer funds. Instead, as the trustee and custodian of your own super savings, a successful SMSF should be viewed as one where you have great comfort that the fund is operating well and all necessary items are attended to in a timely manner. So, how do you get this level of comfort? The first thing to remember is that “self-managed” is not the same as “do-it-yourself”. SMSFs are often referred to as a DIY fund, but the only aspect that needs to be DIY is the fact you must be a trustee. So where do you start to get good advice?
Professional approach
First, you should ensure that your SMSF is being professionally administered. There are a number of aspects to this. Unless you are an accountant by trade, you really should think about engaging an accountant to assist with the running of the fund – someone to help with the accounts, book keeping and preparation of statements and returns. SMSFs are subject to a different set of rules to other investment vehicles, so I would recommend you seek an accountant who has sufficient experience in administering SMSFs. Your existing accountant may not have this. Another aspect of the administration of your fund is the annual tax and audit requirements. Your SMSF’s accountant may also be a registered tax agent and experienced with SMSF tax obligations, but your auditor needs to be independent. Again, you should engage an auditor who is experienced with the operation of SMSFs. Ideally, your accountant will be able to recommend one. You should also be aware of the different administrative systems that accountants may use to support your SMSF. Specialised SMSF systems are much more beneficial than the shoe box and spreadsheet approach, as the software providers will always work to ensure their systems are updated for legislative and regulatory changes.
The next professional you should be considering is a lawyer. Ultimately, your SMSF operations will be governed by a trust deed – a legal document that a lawyer needs to draft for you. Selecting the right trust deed with the appropriate flexibility is important, and best to have in place from the very beginning as it can be hard to change down the track.
Seek quality advice
Finally, you could consider engaging a professional financial adviser. While some people have set up their own SMSFs in the belief they don’t need an adviser and can pick investments themselves, remember that the role of a professional adviser is much more than just a stock selector. By seeking quality advice you can have access to an educator, or perhaps mentor, to support you in your role as an SMSF trustee. Super laws are complex, and it would be unrealistic to expect that you can continually be across them all. A good adviser will be able to update you on legislative changes that may impact your SMSF strategies and investments, and also help you gain comfort that you have the right investment strategy in place. And of course, they can help to ensure you have considered all legal requirements (such as the potential need for insurance for members), and that your chosen approach will assist you in working towards your longer-term retirement and investment goals. Not to mention investment selection as well. Investing with the assistance of an adviser may allow you to utilise investments that you couldn’t access on your own, and sometimes at a lower investment fee.
In addition, you may consider the use of an administrative platform to hold the investments in your SMSF. A good platform will not only talk to the underlying administration system used by your accountant, but it can make reporting and documentation much simpler. And a good platform could allow you, your adviser and your accountant to all be able to see what is happening in your fund at any point in time.
Do your research
Now, none of these services come for free, so you need to determine which ones you need and to what degree, or at what point in time. There are a number of tasks that you may be comfortable in performing yourself and this can help to reduce the cost. And some costs may help to offset others. For example, the use of an administrative platform to hold your investments may help to reduce the costs of the administration service from an accountant as some of the work is essentially done for them. Costs will vary from different providers for all these services, so know what you want and how much you are willing to pay.
Just like investments, the best way to find professional support is to do your research. Ask the professionals you are considering engaging with about their experience with SMSFs, how many they look after and how long they have been doing it. Ask what qualifications they have, as there are some specific qualifications issued by industry bodies that are specific to the SMSF sector. And ask your friends about their experiences, or go online and see what others say. Online sources such as BT Adviser View and Adviser Ratings can let you search for advisers based on areas of expertise and see what others have to say.
Source: Bryan Ashenden, Head of financial literacy and advocacy at BT Financial Group. Australian Financial Review Article NOV 2017.
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