The economic and market fallout from concerns about the global coronavirus outbreak, the RBA rate cut and recent ATO investment strategy guidance sends a stark message to self-managed super fund (SMSF) trustees about the need for specialist advice.
SMSF Association CEO John Maroney says: “When global investment markets are turbulent, trustees who have established a strong relationship with their specialist SMSF adviser are well positioned to make the correct decisions about their portfolios.
“The advice and reassurance that these advisers can offer can prove crucial to trustees when it is so easy to be panicked into making the wrong decisions when markets are falling sharply.
“This can be particularly so for trustees who are nearing retirement and are having to watch their superannuation nest eggs, which represent years of hard work and savings, suddenly diminish in value.
“In this environment having a specialist adviser to offer wise counsel on the best course of action can be invaluable.”
Maroney says he is heartened by the that fact the vast majority of SMSFs survived the Global Financial Crisis (GFC), and that many of them did so because of the sound advice they received post 2008.
“The reality is investment markets do fluctuate wildly, especially when a global phenomenon such as the COVID-19 coronavirus hits, so having access to trusted advice is a prudent course of action for most trustees,” he says.
Maroney adds that advisers also have a valuable role to play in ensuring that SMSFs’ portfolios are adequately diversified.
In Australian Tax Office (ATO) guidance released recently, they reminded trustees that an SMSF’s investment strategy should be “your plan for making, holding and realising assets consistent with your investment objectives and retirement goals.
“It should set out why and how you’ve chosen to invest your retirement benefits in order to meet these goals. It is not a valid approach to merely specify investment ranges of zero to 100 per cent for each class of investment.
“It’s an assessment the Association broadly concurs with; specialist advisers can help trustees review their investment strategy and achieve a more balanced portfolio where this is needed,” he says.