One on one with…Greg Mifsud

Greg Mifsud

Goodwin Financial Services SMSF specialist Greg Mifsud was drawn to the sector immediately after completing university. He speaks to Darin Tyson-Chan about his involvement with SPAA and how the over-regulation of the industry is frustrating for SMSF advisers.

How did your involvement in the SMSF sector come about?

I was in the last year of doing my bachelor of mathematics and finance in 1997 and in your last year you really have to start thinking about what you want to do next year. So I started to look in the newspaper for jobs and I saw one that caught my eye that said you must have a degree in finance, mathematics or statistics, and I thought my degree covers all three of those so I better send my resume in. It was a position with a boutique fund manager that covered a whole range of things. The firm was a licensed securities dealer, but also provided advisory and actuarial services and self-managed funds were an area we looked after. I gravitated towards the SMSF side because it was where you could get a deeper engagement with clients. It gave me the opportunity to get involved in financial planning, giving investment advice and doing some administration as well, and being exposed to each of these activities allowed me to improve my skills in each area. So it gave me the most satisfaction and through the years I was able to focus on SMSFs as the business got bigger.

Having a good grasp of the relevant legislation plays a big part in servicing SMSF clients. How did you develop those skills?

That role provided me with an excellent grounding in regard to legislation because the firm was also an approved trustee with an APRA (Australian Prudential Regulation Authority) trustee’s licence. It meant you’d always be looking up the SIS (Superannuation Industry (Supervision)) Act to see what we could and couldn’t do as a trustee. I mean you’ve got to know the law when working for a trustee company. So it was an excellent grounding because it meant I was finding out about the law from first principles rather than just hearing about it or reading it from a technical person or institution. One of the senior managers told me those sort of papers will get you into trouble, but they won’t get you out of it. So I learned to always check the facts and always go right back to first principles in terms of what you can and can’t do.

So what services do you offer at Goodwin Financial Services (GFS)?

GFS is predominantly an advice business and so whenever a client comes in the door the main thing we are trying to help them with is financial planning. SMSFs are just one way of delivering the infrastructure to help them achieve their financial goals and their personal goals. Not every client will end up with an SMSF because they are really just a means to an end. We have to determine if an SMSF is appropriate and see if the client wants one to invest in business real property or particular shares or achieve the control aspect. But predominantly we are giving advice on retirement planning, on building wealth, obviously superannuation.

You have an SMSF Professionals’ Association of Australia (SPAA) specialisation. How did you find becoming a member and has the specialisation made a difference in engaging and servicing clients?

I got involved with SPAA shortly after it was established because none of the other industry bodies were catering specifically for SMSF practitioners. The thing that impressed me the most was when I’d go along to the chapter sessions it was very much a community sense of involvement and everybody was really helpful. Everybody was volunteering their knowledge and it wasn’t just a matter of sitting back and taking it in. There was a real sense of building something and creating awareness and helping to create professionalism in an area that is quite complex because you are dealing with legislation and running a fund, and normally that would just be managed by the big firms. I don’t ask clients whether they came to see me or engage with because I’m a SPAA specialist. But it adds some credibility no doubt about it because it shows that you’re building your own knowledge and your professionalism.

How did you come to be actively involved in the SPAA Sydney chapter?

Having attended chapter sessions for many years, I just thought to myself it would be good to put something back into the industry. You do see new faces all the time, even on the committee, and I thought to myself I’ve been attending these meetings where other people have been putting their personal time and effort into running them, so it’s about time I gave a little bit back. It’s not a huge burden, but you know every little bit helps. So I mentioned to the association if there are any opportunities to get more involved I’d be happy to contribute. And as soon as one came up I applied and got on board.

How many SMSFs do you service and is there a recurring topic SMSF clients are mainly seeking advice on?

We look after around 90 funds and advice on investments is always sought after. Retirement is always a bit of a hypothetical and people are always wanting to know what their returns are going to be and what their portfolio should look like. A lot of people want to be told exactly what to invest in and how much to invest, especially if they’re dealing with larger amounts of money and they’re not used to that, whether they have sold their business, received an inheritance, sold a property, come to retirement and now want more control. These are probably larger amounts of capital than they’ve ever managed in the past so it can be quite daunting. For us as professionals it’s second nature, but for them it’s like lifting up the bonnet of a car and having to change certain parts having never done it before. It would be daunting to know what to do and how to do it correctly.

Most of your SMSF clients have come to you having already established their funds. What sort of state are these SMSFs usually in?

They range in quality but most are in fairly good order. There are often problems such as the naming on the titles not reflecting joint trustees, some thought they had a corporate trustee but that corporate trustee had never been appointed, some have too many bank accounts, and some have different broking accounts. So mainly little things that are not tragic. You do get some extremes where financial statements and audits need to be called up for a few years, but by and large they are okay.

Having been in the SMSF industry since 1998, what would you nominate as the biggest change you’ve seen in the sector?

I think it’s been changing regulator from APRA to the ATO (Australian Taxation Office) back when these structures became self-managed funds. It triggered a lot of other rules around trustees and fund membership. I guess in the last few years I would say it’s been the proliferation of advisers, other institutions and accountants concentrating on the SMSF sector. The media coverage SMSFs get is probably indicative. Before SMSFs would get some coverage, but now it has reached a level where the sector gets constant press. So there is now a wider awareness of SMSFs in the community whereby it’s a common term and most people not associated with financial services will know what you’re talking about when you mention these funds.

If there was one thing you could change about the sector, what would it be?

Over-regulation of the industry is sort of annoying. It’s not something I get hung up on; it’s just something you’ve got to deal with. But what annoys me is quite often legislation is implemented in a band-aid-type manner rather than solving the deeper cause of problems. In my view a lot of the losses people suffer, especially retirees who don’t have time to rebuild their wealth, are caused at the product level as a result of people creating products that may be totally unsuitable. However, the way the regulators deal with the problem is to add compliance requirements at the advice level. A lot of the time the problem has been caused by the product and not the advice. So over-regulation or band-aid regulation is what I would like to be fixed.

What would you say is the biggest challenge facing the sector over the next year?

The constant challenge is dealing with legislators, regulators and parties with self-interests who are trying to stop the growth of SMSFs. That means coming up with rules and regulations that are just simply regulation for regulation’s sake. An example would be getting trustees to sign off on another document or jump through more compliance hoops and so on. In these cases you have to ask what the intention of the rule changes are and whether or not it will help trustees make better decisions. We need to cut the red tape involved in running an SMSF. It’s been something this new government has promised as a priority so we need to see that come into play.

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