This follows calls from the MFAA in September for its members to seek specialist education regarding SMSF lending to avoid being at risk of the Australian Securities and Investments Commission (ASIC) cancelling credit licences.
Phil Naylor, MFAA’s chief executive, said he is pleased to see that so many brokers and their firms have signed up to the training program, as it represents a great opportunity for operators to expand their expertise and scope of service.
“More than 3,000 SMSFs are being established each month in Australia and, with the proper training, mortgage brokers have the opportunity to deepen their relationships with clients through managing the process of gaining a loan for clients’ SMSFs,” he said.
The training program involves a series of modules using a combination of audio and video sessions, assessments and learning checks, case studies, course notes and handouts, and ending with an optional workshop. Completing the program requires an average commitment of about 20 hours.
Great to see this initiative: what brokers can get away with now in terms of SMSF “advice” puts planners and even accountants at a massive disadvantage.
A broker is only accountable for the loan – can say anything about how property always goes up, negative gearing, build a $5m portfolio on $60,000 income anything to land the loan.
I hope the course encourages mortgage brokers to ensure that their clients dont share the very common mis-conceptions about SMSF borrowing.
1.SMSF borrowing is NOT like personal negative gearing allowing them
to by one property, build up equity, then use that property as extra security to borrow to buy another.
2.While interest is tax deductible to the SMSF, the tax rate is low e.g. 15% or even 0% for pension funds. Personal
gearing strategies usually result in bigger tax deductions for interest & building write-off allowances.
3.If a tenant doesnt pay or the property cant be rented, cash for repayments can become critical. Younger clients who can only afford have contributed the minimum 9.25% may find themselves having to contribute more from salary (up to $25,000) or non-concessional contributions of private savings to support cash flow to pay the bank, or risk the SMSF loosing
the property and even having personal guarantees called on.
This is a great initiative of the MFAA and it’s encouraging to see the take up rate. As a previous broker I know there’s a huge business opportunity for pro-active brokers to not only assist and attract clients directly but also form strategic alliances with other professionals.
However, the challenge for brokers is to find like-minded, say accountants and financial planners who are broker and property friendly.
For any number of reasons, there’s been a traditional disconnect between broking and financial planning which should be addressed. Fortunately, we are seeing positive efforts by some in both disciplines to find effective synergies and create great results for all parties.