In an update on its website, ISA advised superannuants that SMSFs contain “hidden traps” and investors should ensure they have two hours per week to manage a fund before starting one.
Members should ideally also have “a very keen interest and strong knowledge of the stock market and investments” if they are to start an SMSF, according to ISA.
Trustees should ask themselves: “Do I have the expertise with shares, trusts and other investment products to make better decisions than the professionals employed by industry super funds?” he said.
Members should ask themselves “What will I give up to put aside the two hours or so per week required to manage an SMSF?” and assess whether the fees that will be charged by accountants, financial planners and auditors outweigh additional gains, ISA stated.
ISA also suggests potential trustees should be able to ensure they will have the capacity to stay abreast of the frequent changes to SMSF rules and regulations made by the Australian Taxation Office, and points out they will need to purchase additional insurance to replace the cover they may have in their existing fund.
ISA also cautioned that SMSFs are less protected than other super funds in the event of theft and fraud, saying “many SMSF investors [have lost] their life savings when they have been the victim of fraudulent activity.
“While an SMSF might give you more control, it comes at a significant cost in time and money that you wouldn’t ordinarily pay, especially if you were with an industry super fund,” ISA stated.
“You also have to deal with more red tape. There are strict Australian Taxation Office rules about setting up and managing your own super fund. And even if you receive incorrect advice from a professional, the ultimate responsibility for the fund still rests with you.”
As the masses become more interested and sophisticated with their understanding of superannuation and the various alternatives in the market, the shift away from industry super will become quite pronounced. A good example of the sort of people on charge of as trustees of industry funds with union links is The former head of the HSU. People have had a gutful of Labor Party hacks helping themselves to six figure trustee/director fees treating these funds of hard working people as just another trough to stick your head in. Once people understand super options better, they will want to have control over their own money and know that people like that noted above are a part of a system bordering on the criminal.
Another bunch of turkey’s rabbiting on with self interested claptrap.There is much to be gained by starting a SMSF. You only need to read how well SMSF’s are performing to see the proof of their success is self evident.
If as an accountant, I could charge out anything like 2 hrs per week per fund, I would be on easy street.
A few investments (4) plus cash (3) bank accounts & (2) members with contributions- maybe 2 hours per quarter to enter data & do IAS. Tops.
Why do I need insurance in the SMSF?
Why do I need to worry about fraud by one trustee against another? Poor investments yes but fraud- 2 cases reported by the ATO from 500,000 SMSf’s.
Another piece of propaganda from ISN. Running an SMSF is not as myred in difficulty as they wish to promote. Get a good Adviser and a good Accountant and most clients will only ever experience the rewarding aspects of SMSF. ISN are “pushing it uphill’. It takes a a lot less than $500,000 for people to be interested in anything other than an Industry super fund with their undisclosed fees and backhanders to the union movement.