Joining Cooper Partners in 2008, director Jemma Sanderson heads up the SMSF specialist services for the firm, where she provides strategic advice for SMSFs. She tells Krystine Lumanta what she thinks of the federal budget’s superannuation proposals and the potential fallout for SMSF clients.
How did you come to be involved in the SMSF sector?
I always had an affinity with finance and I really enjoyed economics so it was a natural progression for me. My first job out of university was at a financial planning practice where I was exposed to superannuation as a paraplanner. I received excellent training there and then I joined another firm that had a very big SMSF client base, where I was really exposed to the sector more for about three years. From there, I moved to a firm where SMSFs were the norm and became heavily involved in providing advice not only to our clients, but to a lot of other firms’ clients, particularly in the technical aspects of super. There was certainly an element of the control in an SMSF that appealed to me. But also it’s a complicated area so to be able to convey that in layman’s terms so that clients can make the most out of it is something I continue to enjoy. I’ve been at Cooper Partners for nearly eight years. The main motivating factor was dealing with SMSFs. Previously I was in firms that provided investment advice, which was perfectly fine, but where I am now, we concentrate on structuring advice.
You’re currently a director at Cooper Partners. What education did you have to undertake to get to this position, as well as any other past experience?
I’ve completed a Bachelor of Commerce at the University of Western Australia and I have majored in economics and international business finance, with a business law minor. During my first job, I completed my Diploma of Financial Planning and became a certified financial planner. Following that, I got my SMSF Association Specialist Advisor accreditation and I’m a chartered tax adviser as well. I’m also a trust and estate practitioner through the Society of Trust and Estate Practitioners.
What do you enjoy about your role and how do you feel it’s making a difference?
The ability to get clients to a point where they maximise what they’ve got in super as much as possible, which creates a self-sufficient, independent lifestyle throughout their retirement in an effective manner, I find very rewarding. And clients are seeing the fruits of their many years of labour. We don’t touch investments, as we’re not licensed to do that and a lot of our clients have those existing investment advisers in place, so we work collaboratively with them to make sure clients get the best outcome. The structuring side of it is looking at superannuation and SMSFs – what they can and can’t do under the super legislation and tax legislation, strategies for them to adopt with making contributions, starting pensions, looking at estate planning arrangements, and reviewing their compliance with the super and tax laws.
You’re the author of the Tax Institute’s SMSF Guide. How did that opportunity come about and what does it involve?
Back in August 2008, I did a roadshow with the Tax Institute around the country, which involved a four-hour presentation at 11 locations and I had to prepare an extensive paper to go with it. I did this again in March 2009 at another roadshow and there was only one crossover topic between the two events. Each paper was about 90 to 100 pages, so between the two of them, there was a lot of content and the Tax Institute spoke to me about whether it was worthwhile to put it into a publication and pulling it together with additional material, so that’s where it came from. It’s based on a life cycle of a super fund and it gets updated every year. It’s in its seventh edition at the moment. It’s a big undertaking because superannuation is always changing, there’s a new ruling or law or case that comes through that has an impact. It’s a good reference guide for people to have on their desks. It’s certainly quite technical as it’s designed for practitioners.
You’ve been a speaker at many SMSF and superannuation events. What do you regularly present on and what do you hope delegates take away from it?
I’m hoping people learn at least one thing from my presentations, but there’s a lot of nitty-gritty around a lot of these provisions and if people are aware of them, then they’re halfway there. We consult to many practices off the back of events because the presentations contain your intellectual property and a lot of the time they feel it’s too hard, so they come to us for help. Only a small fraction of the population gets advice, so many people out there aren’t optimising their position.You provide structuring advice on SMSFs.
What issues are taking up most of your time currently?
Everyone is waiting for the result of the budget. But we also have a lot of small business owners who are getting their retirement intentions and the running of their business aligned, so they’re buying premises in their super fund which they can then lease back to their businesses. We’re also looking at a few overseas pension transfers. It does vary, but how the budget changes will impact them will be the biggest areas.
What do you think about the 2016 budget changes for superannuation?
The government making changes to superannuation wasn’t unexpected. I’m obviously a superannuation advocate – I think it’s still the best structure in Australia for retirement savings. Retirees have had the best of both worlds with super in recent times – they get a tax-free income personally once they’re 60 and the underlying assets are tax exempt, so that’s been great, but there has always been the thought of those concessions being too good to be true. We do have quite a few clients who will be impacted by those proposed rules in terms of the lifetime $500,000 non-concessional contributions (NCC) limit, the $1.6 million transfer balance cap, et cetera. It’s a matter of reviewing whether we should be doing any planning pre-30 June 2016 so we can get clients prepared for what happens next. I do think the lifetime NCC limit and backdating it to 2007 is a bit rough. Those I feel who are worse off from this are not those who have lots of money in super already, but those who are perhaps in their late 40s, early 50s who were on the cusp of perhaps being able to really build up their super.
They’re going to be really limited with what they can put away now. What are your thoughts on specialisation in the SMSF sector?
Specialisation is incredibly important, particularly considering all the rules around SMSFs. We do get a lot of queries from other professionals because they understand super, but the SMSF space is just above and beyond their knowledge and too complicated. It’s worthwhile having a look at specialising because if you’ve done RG 146 or the equivalent, there’s no way it would equip you to provide the advice required for someone with an SMSF. I think there is a large amount of specialisation already out there, particularly with auditors. I’m also seeing more and more accounting practices have a dedicated in-house superannuation person.
What’s the biggest change you’ve seen in the industry, positive or negative?
At the moment, it’s the limited licensing. I think there will be implications around misunderstanding of what the accountants’ exemption does and doesn’t allow accountants to do, with what the full or limited licence will allow or won’t allow you to do. I see that a lot of firms have embraced it so it can be business as usual for them, but others are waiting to see the lay of the land. The removal of the exemption has certainly thrown people for six in terms of what they can and can’t do going forward. It will be interesting to see the enforcement of the new regime once we hit 1 July and whether accountants will change the way they operate and perhaps this will make it clear-cut in terms of delineating who is responsible for what, especially in front of clients.
If there was one thing you could change about the SMSF sector, what would it be?
It would be the education piece. The lack of understanding around how certain things work can be quite scary at times in terms of people who aren’t exposed to super or SMSFs as much. But they think that they do know their obligations, so we do a lot of fixing. Advisers need to take responsibility for educating clients as well so that the right people have an SMSF.
What’s the key challenge facing the sector over the next 12 months?
There’s uncertainty around the budget proposals. They’re not general, but they are vague, so we don’t know the nitty-gritty, which can be a make or break for clients. It is a matter of adapting and changing as you need to. I’m excited about the election so that we can get some certainty around budget changes and what the law might actually look like. Then we can advise our clients for them to get the best out of it.