Looking at the self-managed super fund sector today, it seems hard to imagine that a mere decade and a half ago it could have gone extinct. In 2017, more than a million individuals rely on more than half a million SMSFs as their vehicle of choice to accumulate retirement savings and generate income during retirement. SMSF assets stand at more than $600 billion. But in mid-2002, Andrea Slattery, now chief executive and managing director of the SMSF Association, was approached by the Australian Taxation Office (ATO) to “do something” to represent the sector in the face of legislation that would have, for all intents and purposes, shut it down.

SMSFs came into existence in 1999, when the Superannuation Industry (Supervision) Act was amended to create a new category of small super fund, to be regulated by the ATO. Slattery, who will step down from her role in May of this year, says she was first introduced to the concept of the self-managed fund through her work in accounting.
“During the mid-1990s, I became more heavily involved in advising clients in, at that stage, excluded funds and financial advice generally, as well as tax advice,” she recalls. “By early 2002, I was recognised as one of the leaders in advice for SMSFs, retirement and financial advice in South Australia and possibly Australia. In 2002, I decided to start my own business consulting practice, [specialising] in setting up SMSFs and [advising] financial advice and services practices in accounting and legal firms. I could see that it was a very viable business opportunity for the professions to lead.”

Creating an association

Following the approach from the ATO, Slattery determined that the best way to protect the sector was to create an association that could represent the various stakeholders in the industry and play an active role in formulating policy that would not only ensure the survival of SMSFs but also create a fairer and more equitable retirement savings system across the board.
The SMSF industry was, she says, one that “I felt would one day underpin our national prosperity”.

“It was an opportunity to build a genuine profession through education, professional standards and recognition of excellence through accreditation programs. [It was also a chance] to more fully engage trustees and potential trustees to [help them develop] greater knowledge and information so they could make informed decisions,” she says. “I could also see there was a need for more efficiency in the delivery of services and for more opportunity to develop investment suites in which people could invest – things such as new product designs like exchange-traded funds or investments [in areas] such as infrastructure, that were not [then] available…for SMSFs.”

In 2007, Slattery says, the SMSF Association (then known as the SMSF Professionals’ Association of Australia, or SPAA) was “acknowledged as having saved the SMSF sector by Nick Sherry, at the [SPAA] national conference”.

To grow and serve

If Slattery and her fledgling association had saved SMSFs, the next stage was to get to work to see them flourish and to serve a burgeoning community, “including professionals, trustees, service providers, educators, government and regulators, investment and markets”.

The forerunner to the SMSF Association was set up in 2003 and Slattery says that from day one its aim has been to “work to enhance the professionalism of those advising SMSF trustees – a task that continues to this day”.

“We also worked with the government of the day and the various regulators and government departments to develop a legislative and regulatory environment in which SMSFs could flourish,” she says. “SMSFs are now the largest sector in the superannuation industry, with more than 1 million trustees, more than half a million funds, and funds under management in excess of $622 billion,” she says. “Three major reviews into the SMSF sector – by Cooper, Costello and Murray – essentially gave the sector a clean bill of health.
“In the wake of the global financial crisis (GFC), some analysts suggested SMSFs would struggle and trustees would opt to return to the APRA-regulated system. In fact, the GFC prompted many people
to take direct control of their superannuation and set up their own SMSF.”

The future for the SMSF Association clearly includes closer contact with the 1 million people who are members and trustees of self-managed funds. Slattery says the association has always included trustees in its thinking and policy work, but: “Our decision to directly represent trustees has been motivated by the need to improve trustee understanding of what is involved in having an SMSF and to create a greater awareness of the expertise that is available to trustees via SMSF specialists.

“We are firmly of the view that better-informed SMSF trustees will seek professional advice,” she says. And she insists that the sector is professionalising rapidly.

“The SMSF profession has been built,” she says. “It has been built over the past 14 years, by us. All of the financial services are looking for public recognition as a profession. There will be professions within the profession, and one of those will be SMSFs. We’ve been pushing that for 14 years and doing it through one area – and that is now being recognised.
“I have a personal drive to make sure we look after consumers. We have got to provide them with information to make sure they can make good decisions. I am in a unique position, where I know how to make sure people get good advice, and I know how to make sure that advice is competent.”

Slattery says the SMSF Association has emerged strongly from 2016, which she describes as “the year of probably the greatest legislative reform around the financial services industry, which includes SMSFs, superannuation, investment, advice and professionalism”.

“It’s been a pretty big year across the board,” she says. “The changes through the budget were the largest changes to superannuation that we have seen for 10 years. Almost every person who is employed will have an interaction with these changes. Many [interactions will be] positive, and many will make people think about their future.”

Access to high-quality services – including financial planning

Slattery maintains that SMSFs remain far and away the most flexible option within the superannuation sector for individuals to maximise the benefits of the budget changes. But to make the sector fly, members and trustees need access to high-quality professional services, including advice and financial planning. She regards the role of the association as central to that.
“If you look at the year we’ve had from our point of view, our association has had an enormous amount of success in those legislative changes,” she says. “Of the 13 changes, we were promulgating eight of them. The majority of those eight have been ours for many, many, many years.”
Slattery says the association is a good example of what can happen when a group of focused and dedicated people comes together to “support a worthy goal – giving people dignity and security
in retirement”.
“Throughout our existence, we have seen it as [our duty to play] an active role in developing advice as a recognised profession,” she says. “The fact that SMSF specialists are now officially recognised as a profession is testimony to the role I have played. Today, it is why we are supporting the federal government’s decision to legislate to improve the professional standards of financial advisers. Improving the educational and ethical standards of financial advisers has been our long-term policy.
“What we have always argued is that having advisers who meet rigorous standards and have completed relevant education courses is crucial to ensuring consumers receive the best quality financial advice. This can only become more important with the baby boomer generation approaching or entering retirement.”

 

For Professional Planner‘s coverage of the SMSF Association’s National Conference 2017, go here.

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Simon Hoyle is head of market insight for CoreData Research.