Tooling up for investment strategy compliance

Many self-managed superannuation funds don’t meet the new investment strategy-compliance requirements while others are “unnecessarily worried” that they don’t, according to Meg Heffron, principal of SMSF administrator, Heffron.

Heffron urged financial planners and accountants to brush up on changes to the Superannuation Industry (Supervision) Act, which now requires trustees to regularly review their investment strategies and consider whether the fund should hold policies of insurance over the lives of members.

“We often find SMSF investment strategy-compliance requirements fall into the lap of the accountant or the trustee’s adviser or even worse, between the cracks,” she said.

“The rules on investment strategies are not complex, but they are an important part of the fund’s overall compliance efforts. The document itself can take virtually any form the trustee wishes, as long as it provides sufficient evidence to the regulator and the auditor that the trustee has a plan, is implementing that plan and is reviewing it regularly.”

Under the rules, the trustee must be able to demonstrate that there is a plan as to how the fund’s assets are going to be invested and proof that the plan has actually been followed or implemented.

Heffron said there were common misconceptions about the requirements of an investment plan. For example, many people believed a strategy must contain asset allocation ranges and be broad enough to cover the circumstances of each member.

However, there is no legal requirement for this, she said.

Recently, Heffron launched a new online compliance service for SMSF practitioners, which includes a strategy document template and a derivatives risk statement. There’s also a six-page practitioners’ guide written to help trustee clients understand their investment strategies, and if required, some model asset allocation tools.

The Investment Strategy Compliance package costs $55 for a single licence or $275 for an unlimited annual licence.