Self Funded Super Is Short On Advice

19:44' 10-07-2018
Around 90% of financial advice on setting up a self-managed super fund (SMSF) does not comply with relevant laws, making it a dangerous option for retirement planning.
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    Kết quả hình ảnh cho a self-managed super fund

    Photo: yourpropertyhound.com.au

    The Australian Securities and Investments Commission (ASIC) reviewed 250 client files, randomly selected using Australian Taxation Office (ATO) data, and assessed their compliance with the obligations of the Corporations Act.

    In 91% of files reviewed, the adviser did not comply with Corporations Act’s “best interests” duty and related obligations. In 10% of the files, the client was likely to be significantly worse off in retirement due to the advice given. In 19% of cases, clients were at an increased risk of financial detriment due to a lack of diversification.

    ASIC also conducted market research including interviews with 28 consumers who had set up an SMSF, and an online survey of 457 consumers who had set up an SMSF. It found that many people do not understand fully the risks of SMSFs, or their legal obligations as trustees.

    About one in three online respondents found running an SMSF more time consuming than expected, more expensive than expected, did not know the law required an SMSF to have an investment strategy, or mistakenly believed that SMSFs had the same level of protection as prudentially regulated superannuation funds in the event of fraud.

    ASIC also found some people had chosen SMSFs as a way to get into the property market, and were using it solely for this purpose. Some advisers, who had a relationship with a developer or a real estate agent, encouraged clients to invest in the products of those developers or agents. This put people at increased risk of getting poor advice that did not take account of their personal circumstances, or was not in their best interests.

    ASIC Senior Executive Leader Jo Bird says SMSFs are a good product for some consumers, but they bring with them higher risks, greater responsibility and they demand much greater consumer engagement. People should think about all of those issues before they decide to set up an SMSF.

    ASIC will be taking follow up regulatory action, in particular where consumers have suffered detriment.

    Somchai R

     

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Keywords: australian securities and investments commissionaustralian taxation officefinancial advice

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