Planners lacking SAF awareness
There is a lack of awareness and knowledge about small Australian Prudential Regulation Authority (APRA) funds (SAFs) among financial planners and dealer groups as an alternative to self-managed superannuation funds, according to an industry consultant.
Financial planner and head of JWW Consulting, John Wiseman, warned that this would draw the ire of the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO), and said in the worst case scenarios of SMSF advice there were planners who were unaware of SAFs.
"When providing financial advice, many planners often overlook SAFs as a superannuation solution as they regard SAFs as a more expensive (although this may well not be the case in the new environment) and less flexible alternative to an SMSF — even though they offer many benefits not found in SMSFs", Wiseman said.
The comments came in light of Wiseman's prediction that the number of SMSFs opting out of current arrangements in favour of retail, corporate or industry funds would swell.
Wiseman said that while SMSF trustees desired professional advice on whether they should consider other options, planning practices were not preparing for this inflow of new business enquiries and opportunities.
Wiseman pointed to two additional concerns.
"The cost of providing advice is going to literally go through the roof and planners need to start charging a realistic fee for service that reflects the level of service and accountability for advice provided," Wiseman said.
"Of most alarm are those planners who are not providing clients a comprehensive alternate strategy to current arrangements."
Wiseman said SAFs could be a viable alternative for those SMSF members remaining in SMSFs only because of taxation and other consequences resulting from moving of funds.
While SAFs have a similar structure to SMSFs, trustee responsibility would fall on the shoulders of an APRA-licensed trustee.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
