Leah Sciacca (center) and Emma Rosenzweig (right)

Regulators from ASIC and the ATO have highlighted the importance advisers have as gatekeepers for clients to open an SMSF – without them the sector may struggle to maintain credibility.

Speaking at the SMSF Association National Conference in Melbourne, ATO deputy commissioner Emma Rosenzweig said the regulator sees “significant variance” in the knowledge and capability of new and existing trustees in running their SMSFs.

“We know this has a direct correlation to a fund’s ability to meet their obligations and performance,” Rosenzweig said.

“It’s a common theme coming from trustees who do get into issues, but they tell us they didn’t understand the rules or the work it would take to run their own super fund.”

She said this has flow-on impacts for advisers because trustees often forget the ‘S’ in SMSF and believe professionals will be responsible for running the funds.

“This means you have a critical role to play in helping us maintain the health of the system by encouraging individuals to only enter and stay in a self-managed super fund if they’re fully committed to meeting their obligations,” Rosenzweig said.

TMI

The corporate regulator updated its guidance on giving advice for SMSFs last December with Information Sheet 274, which aimed to simplify compliance tips for advisers.

ASIC senior executive leader Leah Sciacca said the review of the guidance also included re-visiting early ASIC statements about SMSFs balances and performance comparisons against APRA-regulated funds.

Additionally, the updated guidance removed the minimum recommended balance for an SMSF.

“ASIC consider the superannuation balance whether high or low – while important – is only one factor when considering whether an SMSF is suitable for a client,” Sciacca said.

Other factors the regulator is reminding advisers to consider when assessing the appropriateness of setting up an SMSF for a client are risks and costs associated with setting up or switching to one, investment strategies, diversification, liquidity, asset choice, trustee responsibilities and time commitment.

“The overarching objective of [Info 274] is to help financial advice licensees and their representatives comply with their obligations for providing personal advice on SMSFs,” Sciacca said.

She added the regulator wanted to highlight the importance of advisers using their professional judgement when determining whether setting up an SMSF is appropriate for clients.