Principal and director of John Scully Financial Services, John Scully, said that while SMSFs were the “flavour of the month”, few funds were well managed.
“I think that many SMSFs are poorly managed,” he said.
“I don’t think that they are cost-effective. I think that they are the ‘flavour of the month’ and that in time, people will regret having one and they will have to be fixed up.”
Scully said he believed that often people who decided to set up SMSFs didn’t have a large enough pool of money.
“Clients really need a decent balance to set up an SMSF,” he said.
Recently published Australian Prudential Regulation Authority (APRA) superannuation statistics showed that for the year ended 30 June 2012, there were more than 478,000 SMSFs, with the number growing at an average of almost 3,000 new funds per month.
Such a period represented the highest year of growth since the beginning of the global financial crisis.
But AMP’s SMSF administration managing director Andrew Hamilton rubbished the claims, saying that the majority of SMSF clients sought professional advice.
“There’s a misconception that self-managed means making a decision by yourself, but the majority of clients actually get professional advice,” he said.
“I disagree with the comments. A large segment of the SMSF sector is serviced by financial advisers, planners, accountants … there are professionals attached to a lot of these funds.”
However, Hamilton stressed that clients should make sure they set up an SMSF for the right reason.
“SMSFs are not for everybody, clients should seek to make sure they are the right structure for them,” he added.
He predicted that SMSFs would continue to grow, with an estimated 500,000 SMSFs expected by the end of the calendar year.
“The SMSF sector has gained popularity, with it becoming more of a professional services industry,” he said. “The main driver of this has been clients taking ownership and wanting control over their superannuation. They want to have control and flexibility of their investments.”
One of the benefits of SMSFs is the ability to embed life insurance into the fund, he added.
Whilst I certainly agree that SMSFs are not for everyone. In my experience, they can be a very efficient vehicle for the informed and competent trustee. I would have thought that “and will forever be subject to detailed Gov’t scrutiny and regulation” which seemed be quoted as a negative by John Connor is actually an advantage for clients.
Mr Scullys comments show he has been ill advised regarding SMSFs, there are already over 500,000 SMSFs now which is constantly increasing and I think the main issue that is relevant is that people are not setting up a SMSF for the right reasons. The answer to this is to obtain the correct advice for clients and SuperShift Australia does just this! They have an affiliate network of Tier 1 advisors who examine each clients situation and provide correct and educated advice as to whether a SMSF set up would be right for them.
SMf’s offer something that industry funds and overpriced platforms dont and that is quite simply transparency . Thats why clients have embraced them .Unlike the various retail and union run industry funds clients at least know how and where their capital is invested, and what they are paying for.
I suppose that it is irrelevant that 75% of Australian retail equity managers did not beat the index over the last 5 years .
Mr Scully is completely uninformed or badly advised. Trustees of SMSFs are well advised by their accountants and receive a much more individually tailored advice than members of Industry Super Funds. The checks and balances in the system work well. On balance the ATO statistics indicate a cheaper and better performance than gross Industry averages.
Handling of successorship would have to be queried in large funds. It is talked about from accountants to trustees regularly.mqks4
As platform architecture becomes more flexible to allow access to a broader range of assets and as prices continue to compress, I believe the case for cumbersome SMSF structures will become less compelling. If a platform designer put their mind to a pooled investment environment for a married couple they would have a significant competitive advantage over SMSF’s which are high maintenance and will forever be subject to detailed Gov’t scrutiny and regulation.
What makes John an expert, does he work with SMSFs? or he he just another legacy adviser with old ideas and a big book of grandfathered trail comms??
Get real, 2% in a retail fund or $2000 to run and smsf. DO the maths.
Theres a misconception that self-managed means making a decision by yourself, but the majority of clients actually get professional advice,. Can anyone else see the misnomer?
I think John Scully must have been mis-quoted. No-one who understands SMSFs and the costs involved with them compared to retail superfunds, could deduce what has been reported and attributed to John Scully.
Gerard