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Financial Planning, Superannuation

Advisers still unclear on SMSF set-up

SMSF personal advice

Advisers are still uncertain as to what is considered personal advice when setting up an SMSF for a client, with trustee structures a trap for the unwary.

Financial advisers still appear to be struggling with what constitutes personal advice when helping clients set up an SMSF more than a year after ASIC outlined the difference between it and information related to setting up an SMSF.

Addressing a recent webinar, SuperConcepts technical services and education general manager Peter Burgess said there were some cases where an adviser could assist clients to set up an SMSF without providing financial product advice, and this could take place if the client had decided to set up a fund and only wanted assistance with the practical steps required to do so.

“If, in the course of providing these services, the person makes no recommendation or statement of opinion that might influence the client’s decision about an SMSF, these services would not involve the provision of financial product advice,” Burgess said.

Speaking to selfmanagedsuper after the webinar, he highlighted that it was easy for advisers to cross the line into providing personal advice and this usually took place while running through the set-up process.

He pointed out that any services related to establishing the SMSF only constitute a financial service of arranging to deal in an interest in an SMSF, not personal advice, but in providing these services an adviser may provide personal advice.

“Where the issue crosses the line in many cases is the discussion about the nature of the trustees within the SMSF and whether it should be a corporate or individual trustee. Any assistance or information provided here, even if done to help the clients, may be considered in the territory of advice,” he said.

File notes were important to document where advice was not being provided and to avoid any future claims the client was influenced in their decision by the adviser, and ASIC had provided guidance on this as part of its Report 575 released in June 2018, he noted.

“ASIC set out its expectations in that report, but it appears advisers are still struggling to understand where the line is drawn, which is why we get asked questions around what constitutes advice, and the trustees issues seems to be a key area where advisers are struggling,” he said.

“From ASIC’s point of view, if you are in the business of setting up SMSFs, you need to be careful because you may find yourself in the personal advice space.”

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