FPA responds to ASIC SMSF report
The Financial Planning Association of Australia (FPA) acknowledges the findings of ASIC’s report into self-managed superannuation fund (SMSF) member experiences and supports the practical tips it provides to financial planners to improve the quality of SMSF advice they give to clients.
ASIC Report 575 SMSFs: Improving the quality of advice and member experiences engaged an independent expert to review 250 client files where an advisor had provided personal client advice to set up an SMSF. The client files reviewed were randomly selected by ASIC from data provided by the ATO.
The Report concludes that as a result of following the financial advice given, 10 per cent of the clients risked being significantly worse off in retirement. A further 19 per cent of the clients were at increased risk of suffering financial detriment, and in 62 per cent of client files, ASIC found that the advice provider did not demonstrate compliance with the ‘best interests’ duty and related obligations, although noting that there may not have been any client detriment.
Commenting on the report, Dante De Gori CFP®, CEO of the FPA, said, “SMSFs can be an appropriate option for many Australians, however they are not suitable for everyone.
“There is no doubt that these results will focus the efforts of Code Monitoring Bodies, once approved, on the proactive supervision of SMSF advice,” added Mr De Gori. “This is a growing sector and good advice is imperative to ensure the best outcomes for those who choose an SMSF as the vehicle to manage their retirement savings.”
The FPA applauds the practical tips developed by ASIC and encourages all financial planners giving SMSF advice to review and embed these suggestions in their advice practice. These include tips for improvement in areas such as the role and obligations of SMSF trustees, the suitability of an SMSF structure, risks of an SMSF structure, investment strategy, alternatives to an SMSF structure and record keeping.
The FPA will be developing training and support for members in this area to ensure that Australians seeking advice in relation to SMSFs can rely on quality advice from our members.