SMSF Association Media Release
Recently reported industrial scale schemes encouraging people to transfer their superannuation savings into a self-managed super fund (SMSF) is deeply concerning, says SMSF Association CEO Peter Burgess.
“The Association has a long history of warning investors about the dangers of these types of schemes, which typically involve cold calling and investors being “sold” an SMSF with a promise of unrealistic investment returns.
The sector needs to be on alert about the resurgence of this nefarious activity.
“Such practices are contrary to what our super sector stands for – a long-term investment approach using a diversified portfolio with the end goal of achieving a dignified and secure retirement.
“In sharp contrast, these schemes typically ‘encourage’ people to establish an SMSF for the sole purpose of selling an investment product that is often associated with promises of unrealistic returns.”
Of concern is the self-interest driving these sales, the lack of investment diversification, concentration in high risk or poorly performing assets, and the inappropriate selling of an SMSF to access their product.
Burgess says that following the 2019 Hayne Royal Commission, ‘anti-hawking’ laws were legislated in 2021 that prohibited unsolicited sales and cold calling, prompted by past experiences where these practices had led to poor consumer outcomes.
“This kind of behaviour is also counter to the legislated best interest’s duty and the financial adviser Code of Ethics – a Code that goes above the duties and obligations imposed by law.”
The Code imposes certain obligations on financial advisers, including acting in accordance with applicable laws, acting in clients’ best interests and not advising where there is a conflict of interest
or duty.
“In addition, all advice and recommendations must consider the broad effects arising from the advice, and must be offered in good faith, competently and must not be misleading or deceptive.”
Burgess says what the upsurge in cold calling highlights is the need for anyone considering setting up an SMSF to get independent, professional advice from a licensed financial adviser who is a qualified SMSF specialist.
“Deciding to set up an SMSF and take direct responsibility for your superannuation is a major financial decision that should never be taken lightly. As the Association has always maintained, SMSFs are not for everyone, so the input of an SMSF specialist before embarking on this journey is critical.”