The current campaign being waged against self managed superannuation is over the top, according to financial services lawyer Peter Townsend.
Townsend has lashed back at comments by “financial services industry pundits”, who he says have a reason for wanted to see SMSFs hobbled in some way.
“Should investors be thoughtful before setting up an SMSF? Absolutely. But no more so than they need to be in respect of their other investments,” says Townsend.
“I’m not saying that the trustees should not have a basic understanding of what it takes to be a trustee. But that is in my view a lot less than the level of knowledge suggested by those trying to restrict the self managed sector.”
Townsend says that in his view, a two-page list of dos and don’ts, plus professional advice, is all a trustee needs.
He goes on to bust the myth of a minimum investment amount, saying that there is no correct amount because it differs for every individual.
“A curious paradox here is that the very people who insist that each investor get tailored investment advice that meets their particular situation, needs and objectives, are the same ones who often want to prescribe a minimum amount irrespective of the investor’s specifics.”
Townsend says that no figure could be set unless you know a client’s whole financial situation including how much they have in assets outside super.
Matt Kidd from Omniwealth says that 70% of their SMSF clients have less than $500,000 and he expects that number to grow.
“We certainly expect that number to grow as younger people, especially couples, realise that they can combine their super into a SMSF and gear into a property.”
But he says that they work very closely with their trustees so they understand the importance of being a trustee and the responsibilities that come with it.
“Having said this, we also want them to feel that we ‘have their back’ when it comes to legislation and regulatory compliance.”
SISFA director Darren Kingdon agrees that the “issue of minimum balance issue is overhyped”.
“If there is full & transparent disclosure of the consequences of say closing one fund down & commencing another then surely consumers have the right to choose,” he says.
Townsend thinks that ASIC should be spending more time ensuring that theft and fraud doesn’t occur in the first place, rather than scaring consumers.
“It saddens me to see that ASIC is buying into these negative arguments by going back to its usual solution of making advisers create more paperwork – more disclosure requirements, more documents that few read or understand, even more transference of liability to advisers. And all to solve a problem that doesn’t really exist.”