SMSF trustees who are making changes to their fund’s investment strategy should formally minute that decision, rather than just implementing it, to show they are meeting their obligations, a technical services manager has pointed out.
BT head of financial literacy and advocacy Bryan Ashenden said recording any decision regarding an investment strategy, in a written resolution, was necessary as this was an extension of other requirements under the Superannuation Industry (Supervision) (SIS) Regulations.
“You should have a resolution that documents the fact the trustees have considered their investment strategy and made a change as it gives you the proof as to why it has changed,” Ashenden said during a recent adviser briefing.
“It also shows the trustees have discharged their duties about regularly reviewing the investment strategy of their fund.
“You should have a written resolution, a trustee minute effectively, showing where there is a change. The same would apply if you don’t make a change with a trustee minute in place to show where it has been reviewed and why it hasn’t changed.
“These minutes are proof points in terms of meeting the ability to discharge those obligations.”
He noted this documentation was not expressly required under SIS Regulation 4.09, which also did not state a strategy had to be in writing, but the requirement to regularly review and give effect to an investment strategy meant documented evidence of those actions would be produced.
“Technically the strategy and review does not need to be in writing, but practically it does,” he added.
“How can you demonstrate you have formulated an investment strategy? How can you show there is something you’re picking up to review and how can you show that you are giving effect to an investment strategy if you can’t physically point to a particular document?
“That’s why, practically, we always say an investment strategy needs to be in writing, even though the legislation itself doesn’t specifically require it.”
