A superannuation technical expert has identified the issues that must be taken into account when practitioners are looking to implement multiple investment strategies for members of a single SMSF.
Accurium head of SMSF education Mark Ellem pointed out this is a situation where a particular course of action allowable by law does not necessarily mean trustees should opt to take it.
In particular, Ellem suggested client communication is very important in these types of scenarios.
“Always make your clients aware of what’s involved [with a plan like this]. We often see [members] at different stages of their lives and so you might [implement different investment strategies for them and] yes, it can all be done in one fund, [but that doesn’t mean it should be],” he told participants in the latest Accurium technical webinar.
To this end, he pointed out knowing the implications regarding the administration of the fund is a very important factor to consider as is the practitioner’s own ability to service a client strategy like this.
“[You have to have an] understanding of the admin platform that you use caters for that. Does it cater for it? How does it do it?” he asked.
“[Also, you must know if] you have the staff who know how that works and can do it. [Further, you must consider] how much extra work is involved, and from a [practice owner’s] perspective, what am I going to charge the client for [these services].”
According to Ellem, when a proper operational assessment is performed relating to servicing multiple investment strategies for a single SMSF, it may be discovered the action is not cost-effective for the client.
“When I was in practice and the client wanted to do this, I’d [often tell them] the fee will be more than the admin fee for three separate funds,” he revealed.
“So the rules [might] allow it, the [trust] deed [might] allow it, but [you have to know how it will work] from a practical point of view.”
