SMSF – Minimum needed as recommended by ASIC

In an attempt to improve the quality of advice provided by advisers on SMSF, the Australian Securities and investments commission (ASIC) has released two information sheets – click on the link below for more information:
Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks, or INFO 205, and
Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs, or INFO 206.
The information sheets specify the types of risks and costs one should consider when deciding on whether to establish or switch to a SMSF. The information sheets also deal with the cost-effectiveness of a SMSF, making clear ASIC’s view that a SMSF with a starting balance of $200,000 or below is unlikely to be in the client’s best interests and that advice to establish one below that threshold is more likely to be scrutinised by ASIC. “Setting up an SMSF is a significant financial step for consumers and many factors can impact their decision. It is therefore important that consumers receive good quality advice that will assist them in making informed decisions about their retirement savings,” ASIC’s deputy chairman Peter Kell said.
If you would like more information on the costs of operating a SMSF – click on the link below:
Costs of Operating SMSFs Report by RiceWarner Actuaries.
The underlying costs of operating a SMSF can be found on page 5 of the RiceWarner Report and comparing the cost of SMSF to Retail Super funds can be found on page 9. Please note that “low” fees in the report means the trustee/member is doing most of the admin work/decision making.
Costs are not the only consideration when making the decision as to whether to invest in a SMSF or an APRA regulated/retail super fund. These other issues include:

  • The time available and expertise of the Trustees/Members; 
  • Loss of protections available to members of APRA regulated/retail super funds; 
  • Asset allocations & diversification; 
  • Anti-detriment payments;
  • Gearing; and 
  • Dealing with falling balances at older ages.

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Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

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