The economic uncertainty following the coronavirus outbreak and the Reserve Bank of Australia’s (RBA) latest rate cut has highlighted the importance of specialist advice for SMSF trustees, the SMSF Association has said.
The SMSF industry body said the market impact of factors such as the global outbreak of the COVID-19 coronavirus and the RBA rate cut, as well as the ATO’s recent guidance regarding SMSF investment strategies, had heightened the need for specialist SMSF advice.
“When global investment markets are turbulent, trustees who have established a strong relationship with their specialist SMSF adviser are well positioned to make the correct decisions about their portfolios,” SMSF Association chief executive John Maroney said.
“The advice and reassurance that these advisers can offer can prove crucial to trustees when it is so easy to be panicked into making the wrong decisions when markets are falling sharply.
“This can be particularly so for trustees who are nearing retirement and are having to watch their superannuation nest eggs, which represent years of hard work and savings, suddenly diminish in value.”
Maroney pointed to the specialist SMSF advice received by trustees following the global financial crisis of 2008 as a key reason the majority of SMSFs had managed to survive the crisis.
“The reality is investment markets do fluctuate wildly, especially when a global phenomenon such as the COVID-19 coronavirus hits, so having access to trusted advice is a prudent course of action for most trustees,” he added.
He also said specialist advisers were crucial to ensuring adequate diversification of SMSF portfolios, in line with the recent investment strategy guidance issued by the ATO.
“Specialist advisers can help trustees review their investment strategy and achieve a more balanced portfolio where this is needed,” he noted.
Speaking at the recent SMSF Association 2020 National Conference held on the Gold Coast, Super Sphere director Belinda Aisbett warned advisers that the ATO’s expectations as to what an SMSF investment strategy should include exceeded the legal obligations imposed on trustees as defined by the Superannuation Industry (Supervision) Act.