The SMSF Association has labelled the Productivity Commission’s assessment of self-managed funds with balances below $1 million and those with very small asset bases as too simplistic and will be engaging with the government body on this issue as part of the next stage of the consultation process.
“We think that we cannot have just a simplistic view that small SMSFs are inappropriate because we do have a lot of evidence that they achieve scale over time and that in the long term they can be in the best interest of the member,” SMSF Association head of policy Jordan George said during a webinar to members today.
The commission concluded it was difficult to see how SMSFs with a balance of less than $1 million could be competitive against the larger Australian Prudential Regulation Authority-regulated super funds with regard to performance.
Further, the commission communicated its concerns over negative net returns delivered by very small SMSFs.
To this end, George provided some context around the returns in question.
“There are reasons for those negative net returns when funds are small. It’s very much driven by the data collection at the moment,” he noted.
In response to the commission’s concerns about the quality of advice around SMSF establishment and fund switching, he reiterated the industry body’s stance regarding the importance of having practitioners who are sector specialists.
“Our response to that as an association is it really does drive home the need for people who are recommending SMSF to have specialised qualifications and education in that area so they can make recommendations in the best interests of their client fully knowing how SMSFs work and the necessary attributes required to make it successful,” he said.
