The SMSF Association has been critical of the release of the Australian Securities and Investments Commission’s (ASIC) fact sheet, “Self-Managed Super Funds: Are they for you?”, warning individuals about some of the perils of establishing and running their own super funds, accusing the communique of casting the sector in a very poor light.
“By the Fact Sheet’s focus on risks and the use of inconsistent data sources, SMSFs are again portrayed negatively, especially those funds with balances of less than $500,000,” SMSF Association chief executive John Maroney said.
“We take issue with the representation that the typical cost of running an SMSF is $13,900 a year. The use of averages ignores distortions from very large SMSFs and those who choose to use extensive administration and investment services,” he added.
“We will consult with ASIC on the use of this figure, noting that the SMSF software provider, Class, in its submission to the Productivity Commission, indicated the adjusted average cost for lower balance funds was about half that amount or even lower, while our understanding is that many SMSFs operate with total annual expenses below $5,000.”
Maroney reiterated the industry body’s concerns over a lack of balance these types of correspondence demonstrate through not accurately contextualising the older demographic of SMSF members versus other super sector members, existing data inconsistencies and varied return and expense methodology measurement.
“The reality is that it’s very difficult to make accurate, cost-effectiveness comparisons, a point ASIC’s document would appear to concede,” he said.
On a more positive note Maroney concurred with the regulator’s fact sheet message that individuals need to seek specialist advice before deciding to establish and SMSF.
“It’s always been our policy that SMSFs are not for everyone and before anyone sets one up it should be appropriate for their financial and personal circumstances,” Maroney said.
“For people who are prepared to take the time and effort to personally oversee their retirement savings, SMSFs can be very empowering.”
The ASIC fact sheet re-emphasised some of its previous findings from “Report 575 SMSFs: Improving the quality of advice and member experiences”.