Administration, SMSF, Strategy

Question capability before strategy

Investment strategy

SMSF advisers focused on creating an investment strategy for clients should perhaps firstly consider if an SMSF is even suitable for them.

Advisers engaging in discussions about an SMSF’s investment strategy should not focus on meeting that requirement at the expense of determining whether the trustees can actually manage the fund and accompanying strategy, a superannuation technical expert has warned.

Institute of Financial Professionals Australia financial services technician Phil Osborne said SMSF practitioners had obligations that came before creating the investment strategy, including ensuring SMSF trustees were able to meet their obligations as well.

“One thing to consider, and this isn’t necessarily about the investment strategy, it’s before we get to the investment strategy, is whether or not the clients we’re talking to should instigate an SMSF,” Osborne said during a recent webinar.

“We talk to a lot of advisers in this area that say: ‘I am here to help the client. I am here to instigate their investment strategy. I am here to help with the administration of the fund, to prepare tax returns and organise the audit.’

“That’s great, but at the end of the day the client as the trustee is the person that is responsible for that and they need to understand we’re keeping our end of things up when we talk to them.

“If we don’t say something, they can then come back to us if they are liable for a breach and they’re paying for a service from us.”

He said advisers should consider the capability of a trustee before their wish to have an investment strategy, even where the adviser may do much of the work.

“We are going to handle the administration for them, including the investment strategy, but they still need to have some understanding of what they have got themselves into and their role and responsibilities,” he said.

“The other thing is do they have time to manage or assist in the management of the fund? Do they have the time to be able to put that into their daily routine and to make the phone calls and get organised and follow up?”

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