Analysis performed earlier this year by Investment Trends has shown the release of Australian Securities and Investments Commission (ASIC) Information Sheet 274 (INFO 274), entitled “Tips for giving self-managed superannuation fund advice”, has already had an impact on SMSF establishments.
“[Our research shows a good proportion of] SMSF advisers have said as a result of the change in the [ASIC] guidance, they’ve actually already seen [or made] some change either by themselves, so they’ve made changes to the way they approach their SMSF advice and perhaps focusing on it a little bit more, or they’ve actually seen clients come to them [to talk about establishing an SMSF] a bit more than in previous years,” Investment Trends head of research Dr Irene Guiamatsia told delegates at the Class Ignite 2023 event held today in Sydney.
“[So] 16 per cent [of] advisers in the space of four months alone [have indicated this is the case] and we think this is significant.”
The noticeable change contained in INFO 274 was to eliminate a recommended minimum balance for fund establishments, previously $500,000, instead encouraging advisers to use their own professional judgment on what a suitable initial asset balance for an SMSF might be.
According to Guiamatsia, this amendment has been the critical result her analysis has uncovered.
“We know, because we’ve been doing this for decades, that the minimum balance required for clients themselves is an important psychological barrier for them,” she said.
“So I think the softening of the posture here is actually eroding that bias and we think it is actually likely to make a significant impact over time.”
Further, she predicted the elimination of an ASIC recommended minimum SMSF establishment balance will potentially result in a shared position between accountants and advisers of what an appropriate amount in this regard might be.
She pointed out advisers on average currently believe the appropriate asset balance for starting an SMSF is $400,000, while for accountants this figure is $300,000.
The Investment Trends analysis was performed on data gathered over February and March.