Andrea Slattery

The SMSF Professionals’ Association of Australia (SPAA) has questioned the cost findings of the actuarial firm Rice Warner in its submission to ASIC on Consultation Paper CP216.

The SPAA submission, which outlined its stance on the disclosure of costs associated with the operation of an SMSF, said SPAA “was surprised by the report’s findings on when SMSFs are cost-competitive with retail or industry funds”.

SPAA CEO Andrea Slattery said: “The report showed higher costs than what we understand to be prevalent in the SMSF administration market.

“These higher costs led to higher break-even points for SMSF balances to be cost-competitive which might be misleading to trustees.  Because of this we do not think that these calculated break-even points should be used as being indicative of the costs of running an SMSF.  The most common cost, such as the median or most common cost, could be used as a more useful guide.

“Also, the calculated break-even points ignore the very unique and individual nature of SMSFs.  Costs often depend on the SMSF’s investments, the trustee’s level of self-administration and what type of administration platform they use.”

“Once again, we believe that this issue on costs can be resolved by trustees having access to advisers with better knowledge and understanding of SMSFs so they can have a meaningful discussion on how having an SMSF will fit their individual circumstances.”

The post SPAA submission to ASIC takes issue on SMSF costs appeared first on AdviserVoice.

Andrea Slattery

The SMSF Professionals’ Association of Australia (SPAA) has outlined its stance on the disclosure of SMSF risks in its submission to ASIC on Consultation Paper CP216.

SPAA CEO Andrea Slattery says the organisation welcomes ASIC’s goal to improve the standard of advice given to prospective SMSF trustees.

“This includes disclosures on the risks associated with SMSFs; however, the requirements in the ASIC paper may not achieve those goals or be appropriate in the circumstances.

“We believe the general impetus to improve disclosure in order to reduce risks for consumers is merited and will strengthen the integrity of the SMSF sector.

“ASIC’s recommendation that advisers must provide a warning that SMSFs are not entitled to Part 23 compensation under the SIS Act is too simplistic.

“This approach ignores the complex nature of compensation for funds affected by fraud or theft. APRA-regulated funds are not guaranteed compensation under the SIS Act for fraud or theft and the fact that SMSFs do have other avenues for seeking compensation for theft or fraud has been ignored.”

In its submission, SPAA pointed ASIC to the uncertain nature of Part 23 compensation for APRA-regulated funds. The proposed disclosure perpetuates the “common misconception that APRA-regulated funds will definitely receive compensation if the fund is a victim of fraud or theft.

“Instead, we believe any warning that SMSFs are not entitled to Part 23 compensation should be made in the broader context of advisers discussing all compensation arrangements available to SMSFs.”

SPAA’s submission supported the other SMSF risk disclosures suggested by ASIC but warned that these risks often depended on the individual circumstances of the SMSF and their members.

The post SPAA backs ASIC move to improve standard of advice – but says compensation warning ‘too simplistic’ appeared first on AdviserVoice.