SMSF clients needed to be compelled by their advisers to take action in relation to the upcoming changes to superannuation, according to an industry executive.
“To be honest, not too many of our clients are on the front foot or following up, so we’ve found most need us to push them to either get them into meetings or to talk about the changes,” Prosperity Advisers Group financial services associate director Gary Dean told selfmanagedsuper.
“And when we do communicate with our clients, they’re surprised at how many action points there are required before 30 June.
“So I think it will catch a lot of people off guard if they don’t start planning, especially if you’re doing strategies around stopping and starting pensions, and recycling money in and out of super funds where you’ve got to sell down assets. You need a bit of time for that.”
Prosperity was currently communicating the super changes with its clients in order to implement any planning or strategies well ahead of 1 July, Dean said.
“But I’d emphasise that the super changes have caused confusion,” he said.
“A lot of our clients do keep track of their fund, investments and investment performance, but when it comes to the legislative side, it seems like it’s often a constant re-education process.
“Most of the advice we’ve been giving has been around the $1.6 million transfer balance cap where there’s been a lot of confusion.”
He said the more complex client scenarios were where a large age gap existed between members.
“For example, you’ve got an older member who might be in pension phase and over the cap and the other member is younger, eight to 10 years away from pension phase and there are large capital gains in the fund,” he noted.
“Making the decision to reset the cost base is proving a complex issue.
“Another key issue is around non-concessional contributions, so making sure clients don’t miss out on the opportunity of putting in $540,000, and even if they don’t want to do it, we’re making sure they know about it.”
He added his client discussions around the super changes revealed estate planning to be a highly neglected area.
“With our younger SMSF clients, who may not have large balances, but may have significant insurance policies held in their fund, they don’t realise what the size of that asset could potentially be if they were to pass away,” he said.
“So all of a sudden, it’s worth three times the value of their home and they haven’t thought of the estate planning implications.
“We’ve also had a few clients asking about what impact the super rules will have if one member passes away, and that’s come up a few times now.
“I don’t think it’s so much about clients not wanting to pay for estate planning, but more of a misunderstanding where they believe having a will means everything is taken care of because they don’t actually realise super is a non-estate asset.”
Earlier this year, Dean was awarded Adviser of the Year by Hillross Financial Services.
