A specialist superannuation lawyer has warned financial advisers to be aware of how far their duty of care extends when providing advice to SMSF clients.
Speaking at last week’s SMSF Association State Technical Conference Argyle Lawyers founding principal Peter Bobbin highlighted SMSF advisers have a duty of care not only to their immediate client but also to parties like the client’s spouse, children and dependants.
He said the situation is made complicated because while the adviser has a duty of care to these peripheral parties they will not and often must no deal directly with them.
With these parameters in mind Bobbin suggested advisers must make any client communications very specific in order to limit any risks or exposures associated with the provision of advice.
“Note to the client that you have considered them and you can consider their super dependants but you won’t do that unless you’re asked to,” he said.
“Make sure your client instructions are to consider them and not others.”
In addition Bobbin recommended advisers inform their clients that as SMSF trustees they also have a duty to other parties.
“Tell your SMF super trustee clients that they have a duty to their super dependants,” he said.
“Highlight any decision that the member makes will impact upon the dependants.”
Bobbin stressed verbal communication was not enough and that his recommended instructions to the client need to be in written format.
“Document you told your SMSF super trustee that they must consider their dependants,” he said.
According to Bobbin financial planners needed to recognise any risks and exposures in the form of legal claims regarding the advice they’ve given can surface decades later when circumstances facilitate them.