Findings from the Productivity Commission on SMSF advice will not only increase the push for SMSF specialisation for advisers, but also place the responsibility on them to carry out due diligence to ensure establishing an SMSF is in the best interest of the client, according to an SMSF industry expert.
During his webinar today, Smarter SMSF chief executive Aaron Dunn said there is a consistent theme present in the Productivity Commission report on the competitiveness and efficiency of superannuation, the royal commission into misconduct in banking and financial services, and the Australian Securities and Investments Commission’s recommendations with respect to the education standards for practitioners providing SMSF advice.
“This is why organisations such as the SMSF Association are really trying to impress on the government the need to have a greater focus on specialisation because those that are held out as specialists clearly have a strong understanding and are putting people on the right path in respect to receiving advice and running their fund as well,” Dunn said during the webinar, titled “Top nine things you need to know for 2019”.
He warned the onus is on SMSF practitioners to assess whether establishing an SMSF for a client meets the best interest duty based on the available balance.
For example, if a client’s balance is below $500,000, the adviser needs to be able to demonstrate why establishing an SMSF is in the client’s best interest and provide a clear path that illustrates a comparative level of performance and a comparative level of fees that they would otherwise be able to achieve in an Australian Prudential Regulation Authority-regulated fund, he said.
Further, he suggested the focus on increased specialisation could drive accounting professionals to re-examine the advice framework in relation to how other service providers in the industry operate.
“I’ve always been someone not about reinstating the accountant’s exemption, far from it,” he said.