Contraventions rife among non-advised SMSF trustees

 

There are significant compliance failures among SMSF trustees currently not receiving services from an accountant, ....

 

.... with a third estimated to be significant compliance issues, according to Investment Trends data.

Speaking at the Chartered Accountants Australia and New Zealand conference last week, Investment Trends research analyst Recep III Peker said accountants are finding a large number of contraventions within the SMSFs of new clients.

“We asked accountants of the new SMSF clients they’ve had in the past 12 months, how many were compliant in relation to regulations and requirements and the average accountant said only 68 per cent were compliant,” Mr Peker said.

“This means a third of the SMSFs without any accounting relationships are non-compliant - that’s a huge statistic.”

Mr Peker said the main potential contraventions related to administration, failure to document the investment policy, report keeping and in-house assets.

The research also demonstrates the importance of referrals, with word of mouth playing a significantly greater role in the decision to set up an SMSF than recommendations from accountants.

Mr Peker said that in the 1990s, around 60 per cent said they set up an SMSF because their accountant told them to do so.

“Nowadays, that’s no longer [the case]; only about 16 per cent of those who set up an SMSF between 2012 and 2014 said they had [done so] because their accountant had told them to do so,” he said.

Twenty-four per cent of those who intend to set up an SMSF in the future said they want to do so because a friend recommended it, Mr Peker said.

“It’s really important for you to encourage your existing clients to get their friends to go to you when they decide they want to set up an SMSF,” he added.

“The top [financial services] areas people are willing to pay for are all around retirement: if you look at the biggest cluster it tends to be around the age pension and estate planning and succession planning. It’s a huge area of unmet advice, it’s a huge opportunity,” Mr Peker said.

 

Written by Miranda Brownlee
​Monday, 18 May 2015
smsfadviseronline.com.au

  • The real value of advice

    The right words of advice - whether it be from friends or family, business mentor, sports coach - can have lasting impact on the way we lead our lives, manage our businesses. The same holds true for financial advice.

  • Taking a deeper dive into indexation of the transfer balance cap

    With the recent indexation of the general transfer balance cap causing discussion around its complexities, technical experts take a deeper look into what will happen on 1 July.

  • ASIC sounds warning around high-yield bond scams

    The corporate regulator has warned of a rise in scammers targeting Australian investors by pretending to be associated with well-known domestic and international financial service firms.

  • How to pass the diversification test

    Diversification, spreading your money across a range of different assets rather than putting it all into one place, is one of the core principles of investment risk management. That's because investment returns from different assets are never consistent.

IT Financial Services, ABN 48 097 884 976, is an Authorised Representative of Apogee Financial Planning. Apogee Financial Planning Limited ABN 28 056 426 932 is an Australian Financial Services Licensee and has its registered office at 105 - 153 Miller Street North Sydney NSW 2060. A member of the National group of companies.