Administration, Auditing, Investments, SMSF, Strategy

Brief investment strategy optimal

SMSF investment strategy

Overly detailed SMSF investment strategies written over multiple pages will not improve their chances of being compliant with the law.

A specialist SMSF auditor has advised practitioners and their clients to keep the investment strategy of a fund as succinct and simple as possible as the practice will not diminish its likelihood of being compliant with legislative requirements.

“I have yet to meet an auditor that sees a 15-page investment strategy and gets excited. It doesn’t happen,” Super Sphere director Belinda Aisbett told delegates at the Institute of Financial Professionals Australia Conference 2023 held recently in Melbourne.

“We hate them. Short and sweet [is preferable]. I like the page-long ones. They’re terrific.”

Aisbett suggested trustees should consult their auditor in order to formulate a compliant and concise investment strategy.

“If you want to have an investment strategy that is short and sweet, just ask your auditor. [Say] ‘This is what I am proposing, does it cover everything the legislation requires [and] would this pass the audit?’” she recommended.

However, she clarified the extent to which an auditor can participate in the drafting of an SMSF investment strategy.

“We can’t help you write it, but we can [say] yes and check all of the compliance boxes and say ‘off you go’,” she said.

She also took the opportunity to support investment strategies that include asset class allocations ranging from 0 to 100 per cent, a practice the ATO has discouraged.

“As an auditor I love 0 to 100 [per cent allocation ranges], and of course it’s obvious why, because no matter how hard clients try [to manage other specified ranges] they will always be between 0 and 100 [per cent],” she noted.

“[But] if you don’t like [including an asset allocation range of] 0 to 100 [per cent], just leave the ranges out. You don’t need them.

“You could just say ‘the trustees are permitted to invest in the following list of asset classes to whatever degree they think is appropriate’. You don’t have to go into [more] detail.”

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