The industry needed to move on from its fixation with an appropriate minimum balance to establish an SMSF and instead focus more on adviser competency.
Late last month, ASIC released Information Sheet 205 “Advice on SMSFs: Disclosure of risks” and Information Sheet 206 “Advice on SMSFs: Disclosure of costs” (INFO 206) as new guidelines for the industry.
Included in INFO 206 was the recommendation that in most circumstances a minimum asset balance of $200,000 should exist before an individual was advised to establish an SMSF.
In response to whether the recommendation could be flipped to assume all candidates with balances over $200,000 were therefore suitable for an SMSF, AMP SMSF head of policy and technical Peter Burgess said it was imperative the conversation moved away from a number as there were other important factors that had to be considered.
“We shouldn’t just single out thresholds and costs,” Burgess told selfmanagedsuper.
“What’s more important are competencies and making sure that advisers have the competencies to give advice because if we get that right, then discussions around thresholds and costs are not that relevant.
“You can still raise it, but it’s more appropriate and what’s key here is to make sure advisers have got the right competencies so that individuals have got access to professional, competent advice.
“If we get that right, this issue of thresholds and costs is not that relevant.”
He said it was understandable there was a fixation with thresholds as they were visible and could be calculated.
“When I tell people that I work in the SMSF industry, the first thing they ask is how much money they need to have an SMSF,” he said.
“So I’m sure it’s a question advice providers are getting all the time, but we need to keep it in perspective and keep the bigger picture in mind because it’s not just about cost.
“That’s why we don’t like to dwell on costs – there are many other factors at play.”
