FPA throws support behind ASIC’s tips to improve SMSF advice
In response to this week’s report from the Australian Securities and Investments Commission (ASIC) into self-managed super fund (SMSF) member experiences, the Financial Planning Association (FPA) has thrown its support behind the practical tips the regulator provides to financial planners to improve the quality of SMSF advice they give to clients.
ASIC’s report engaged an independent expert to review 250 client files where an adviser had provided personal client advice to set up an SMSF. The client files reviewed were randomly selected by ASIC from data provided by the Australian Taxation Office.
The report concluded that as a result of following the financial advice given, 10 per cent of the clients risked being significantly worse off in retirement.
A further 19 per cent of the clients were at increased risk of suffering financial detriment, and in 62 per cent of client files, ASIC found that the advice provider did not demonstrate compliance with the “best interests” duty and related obligations, although noting that there may not have been any client detriment.
FPA chief executive Dante De Gori said that while SMSFs can be an appropriate option for many Australians, they are not suitable for everyone.
“There is no doubt that these results will focus the efforts of code monitoring bodies, once approved, on the proactive supervision of SMSF advice,” De Gori said. “This is a growing sector and good advice is imperative to ensure the best outcomes for those who choose an SMSF as the vehicle to manage their retirement savings.”
The FPA said it applauded the practical tips developed by ASIC and encouraged all financial planners giving SMSF advice to “review and embed these suggestions in their advice practice”.
These include tips for improvement in areas such as the role and obligations of SMSF trustees, the suitability of an SMSF structure, risks of an SMSF structure, investment strategy, alternatives to an SMSF structure and record-keeping.
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