Dixon Advisory wades into SMSF debate

Financial planning firm Dixon Advisory has urged the Australian Securities and Investments Commission to get its facts right and tighten up the existing rules around self-managed superannuation funds before introducing further, unnecessary complexity.

Dixon Advisory’s managing director, Financial Advisory Nerida Cole said the proposed changes contained in ASIC’s consultation paper 216 may be avoidable if the rules and requirements around the documentation, disclosure and advice of SMSFs where contained in one central, easy to find place.

Currently advice and disclosure requirements that must be provided when establishing an SMSF are listed in a range of regulations and sources.

“Adopting a whole of government approach to streamline the existing regulations, documentation and disclosure requirements for SMSF advice may improve clarity for consumers and help avoid advisers using overly legalistic and bulky advice documents,” she said.

“This should also consider how other providers setting up SMSFs will provide the same level of disclosure.”

Cole also disputed some of the conclusions drawn by ASIC in CP 216, which are based on research conducted by Rice Warner.

“Service arrangements are available for low balance SMSFs at costs below those quoted by Rice Warner,” she said.

“Market research shows that for funds with very low balances service arrangements are available at costs lower than what is listed. Further depending on the fund’s investment strategy, the annual investment costs may also be lower than even the low range estimate quoted by Rice Warner.”

“Considering the costs without also considering the benefits the particular SMSF trustee will gain may lead people to stay in arrangements that are not effective.”

Cole pointed out that the government’s Super System Review concluded that the SMSF sector was “largely successful and well-functioning” delivering investment returns superior to APRA-regulated funds.