The SMSF Professionals’ Association of Australia (SPAA) has dismissed suggestions by a visiting academic there should be a test for SMSF trustees as “elitist” and not about to happen.
Visiting European financial literacy specialist Robert Holzmann – an Austrian academic who was a senior adviser in financial literacy to the World Bank from 2009 to 2011 – was amazed to discover there is no competence test for people setting up a self-managed super fund in Australia, reported The Australian yesterday.
But SPAA strongly disagrees with the testing idea.
“Holzmann showed a real lack of understanding of the SMSF sector and the importance of it in Australia, and also a lack of understanding generally of super trustees knowledge and skills,” SPAA chief executive Andrea Slattery told Wealth Professional.
SMSF trustees are generally highly-educated professionals who also seek the advice of financial and legal specialists while educating themselves about their trustees duties, she said.
“For anyone to suggest compulsory education – when these people work hard towards understanding how the trusts work – is ignorant.”
Holzmann noted recent statistics in Australia from CEPAR, the ARC Centre for Excellence in Population Ageing Research at the University of NSW, which showed that 27.1 per cent of SMSF trustees only have a trade or diploma qualification while 13.7 per cent have only completed high school.
"If you are not sufficiently equipped with knowledge you are running a serious risk as an SMSF trustee," he said.
He was concerned any major collapse by SMSFs will thrust trustees back on the mercy of local taxpayers as they apply for pensions, reported The Australian.
But Slattery said he overlooked other statistics, such as about 75% of trustees have undergraduate degrees or higher and the trades-people are either small business owners or self-employed.
Slattery was also irked that there are all sorts of trusts but nobody has suggested those trustees should get specialist training.
The last APRA Trustee governance report into the APRA-regulated sector – whose trustees manage billions of dollars of other people’s savings – showed more than 90% of these funds did not require any formal education training or requirements to be a trustee, and 81% did not require any superannuation or investment knowledge to be a trustee.
When the Cooper Review handed down its final report in 2010, it specifically ruled out formal training for SMSF trustees, as the sector had been performing well, said Slattery.
“There has been no evidence since to suggest the situation is any different three years later.”
Setting up a test would be costly and unneeded as the system is working with people seeking actively self-educating, Slattery said.
“Predominantly trustees are professional and they know what they’re talking about – they’re self-employed, small business owners or often work in the finance industry – and that makes them well-educated and thirsty for information.”
SPAA provides education specifically targeted at trustees.