What trustees need to know about setting up a SMSF
Trustees of self-managed super funds (SMSFs) are responsible for developing and implementing the strategy for investing their funds’ assets.
That doesn’t mean they need to become an investment expert: they can pay people to advise them and can even use investment products, such as managed funds, in which case the responsibility for selecting specific securities or other assets is handed over to specialist investment managers.
Truustees, however, ultimately choose the overall plan. Claiming that “my adviser told me to do it” is about as effective with the Australian Tax Office as a child saying “the dog ate my homework” at school.
Trustees also need to make sure that their investment strategies are reviewed regularly – ideally annually. Once again, however, trustees can engage investment specialists to assist with this process if it is not something they feel equipped to handle themselves.
What individuals need to know about staying in big funds
As members of large funds, individuals are not responsible for developing the investment strategy of their super contributions. In fact, they can leave every single investment decision to their funds’ trustees.
Even if members belong to funds that have investment options to choose from so they are still making some decisions, they at least have the security of knowing that the trustees have done some due diligence on those investments first – with varying degrees of rigour and success.
That doesn’t mean that individuals can’t lose money in large funds: just like everyone else, trustees invest in markets that go up and down. It just means that when bad results happen, individuals can blame someone else.
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