- SMSF Association Media Release
There was an urgent need for better data, not only for the self-managed super fund (SMSF) sector but right across the superannuation industry, SMSF Association Chair Professor Deborah Ralston told the Association’s 2019 National Conference in Melbourne today.
Ralston told the more than 1600 delegates attending the two-and-half day forum that the Productivity Commission’s initial draft report, released in May last year, suggested that SMSFs were not cost-effective compared with APRA-regulated super funds below a balance of $1 million.
“This conclusion drew attention to the paucity of accurate cross-sectoral superannuation data, and the resultant difficulties in making comparisons between SMSFs and APRA-regulated funds. With assistance from our platform provider partners, the Association was able to successfully argue that the data and methodology used by the Commission to make these comparisons were flawed.
“As a consequence, the Commission’s final report, published in January, thankfully showed that it listened to us and other SMSF experts and revised their cost-effective figure for SMSFs to $500,000.
“Although we believe better data could see this figure fall lower, it’s a vast improvement on where the Commission started from and makes it imperative that the industry has access to improved data to ensure more informed decision-making.”
Ralston also drew attention to the importance of having both excellent professional advice and well-informed trustees.
“It has become increasingly clear that to preserve the integrity of the sector we need not only to have outstanding professional advice, but also ensure that trustees are well aware of their responsibilities. ASIC and the Productivity Commission strongly pointed to the importance of financially literate and knowledgeable SMSF trustees.
“We need to work with professional members to assist in building a trustee education network. Bringing unadvised trustees into our skilled network of professionals and ensuring that all trustees are well informed is essential. I don’t need to tell you about the critics who wait to see poor practice in SMSFs.”
Association CEO John Maroney used his opening address to stress the fact it was important that all advisers had a sound basis for recommending establishment of an SMSF – and only when it was in the best interests of the client.
“This applies whether the client has a starting balance of $100,000, $500,000 or $1 million. What really matters is the personal circumstances of the client and their informed decision as to whether an SMSF suits their personal circumstances.
“As such, we strongly support the Productivity Commission’s recommendation that all SMSF advisers should have specialist SMSF education. We have supported that view for many years and encourage policy-makers to implement that recommendation.”
He noted that the Financial Adviser Standards and Ethics Authority (FASEA) had finalised education requirements indicating how it would drive higher professional standards for all advisers.
“Most advisers will need to undertake some further education, however for most Association members we don’t expect FASEA educational requirements to represent a major threat. Opportunities will arise as a highly educated financial advice profession emerges in the years ahead.”
Maroney also took the opportunity to state why the Association remains steadfast in its opposition to Labor’s proposal to deny refunds of excess franking credits to SMSFs and individual shareholders.
“This issue has been subject to continuing debate in the media and we have contributed to those debates, from a policy development perspective, as we believe the policy is poorly designed and would be unfair and discriminatory if implemented.”