A change to ASIC guidance regarding minimum balances for new SMSFs has removed a roadblock in the mind of advisers, who are only now returning to SMSF advice.
The removal of a minimum figure for the establishment of an SMSF in government-issued guidance has taken away an anti-SMSF roadblock, but many advisers still lack the confidence to recommend that type of fund as a viable option for clients, according to a panel of SMSF service providers.
Speaking at the recent Class Ignite conference in Sydney, Heffron managing director Meg Heffron said the decision by the Australian Securities and Investments Commission to remove references to a minimum balance of $500,000 to establish an SMSF should make it easier to provide advice on them.
“It was a very important first step having ASIC actually walk back from what I would describe as an anti-SMSF stance to acknowledge that it’s a valid option,” Heffron said during a panel session at the conference in regards to changes to Information Sheet 274.
“Yet we are not yet in the space where advisers would routinely think it’s an easy option to recommend and they still feel they have to justify the recommendation. For some it’s much easier if somebody else has recommended it and they have picked that up.
“I find that situation weird because if I was an adviser, I would love all my clients to have SMSFs because a lot of strategies are so much easier in SMSFs and yet we have still got this setting where they feel SMSFs are very hard to recommend.”
SuperGuardian chief operating officer Joshua Williams said the impact of the removal of the minimum balance guidance was still working its way through the advice sector in conjunction with a number of other issues that had constrained SMSF advice.
“[The guidance change] does take away one of those roadblocks in an adviser’s mind around when an SMSF might be suitable for their clients,” Williams said during the session.
“It’s actually probably that there is still the impact from the settling after the Hayne royal commission and the removal of the accountants’ exemption where advisers are feeling a bit more comfortable and generally providing proactive advice around setting up SMSFs.
“There was a bit of a lull period there where they were making changes around the new Financial Adviser Standards and Ethics Authority requirements and generally the confidence of advisers is better. The removal of that ASIC guidance is just another facet of the adviser’s perspective when recommending SMSFs.”
Recent analysis performed by Investment Trends indicated the change to Information Sheet 274 was having a positive impact on SMSF establishments and advisers were becoming more proactive in discussing them and clients were seeking advice as well.