Whilst SMSFs are great for some people, they don’t necessarily suit everyone.
Therefore seeking advice on the appropriateness of a SMSF for you, your goals and objectives plays an important role and is the first step in your decision making process towards setting up a Self Managed Super Fund.
When deciding to set up a SMSF, there are a number of issues you need to consider, and as the Trustee you want to know that your SMSF is compliant and has potential for your retirement income to grow.
This financial decision is even more significant because of the constant rule changes and that ultimate responsibility for the running of the fund and ensuring its’ compliance rests with the Trustee of the SMSF.
To assist you in deciding if a SMSF is appropriate for you and your circumstances, your Financial Advisor should be able to provide you with advice and an understanding of the strategic opportunities that exist for you as the Trustee and Members of your Fund.
Your Financial Advisor should also be able to explore with you complex strategies that could be utilised at various stages of your SMSF’s lifecycle to achieve your Funds’ goals and objectives. This should comprise of research and explanations for the strategic purposes of the range of investment strategies being utilised to achieve the Fund and Members’ objectives, and include the associated benefits, risks and restrictions of the investment strategy.
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Advice & services that a sMSF advisor should be able to provide
Your SMSF Advisor should be able to provide you with services and advice on the following:
- The suitability of a Self Managed Super Fund
- The procedures to establish a SMSF
- The appropriateness of your funds strategy
- Investment strategy considerations relevant to you and your fund
- Risks and considerations resulting from investment strategies recommended
- The appropriateness of a borrowing strategy and the repayment of the loan
- Estate Planning considerations
- The appropriate type of and level of risk insurance required
- Issues to be included in the Fund Trust Deed
- Annual regulatory and tax requirements for your fund
- Organising rollovers to your fund
- Superannuation investment rules
- Types of retirement income streams the fund can pay
- Fund compliance requirements
- Arranging update of the trust deed when required.
SMSF Advisors have a ‘best-interest’ duty and obligation to act in the best interest of the Trustee and the Members of a SMSF. SMSF Advisors who are able to offer all of the above services, and more, are delivering comprehensive advice which is usually referred to as full, holistic advice as opposed to ‘scaled advice’.
Scaled Advice versus Comprehensive (Holistic) Advice
Scaled Advice should not be confused with comprehensive advice. Scaled advice is where the SMSF Advisor does not have the qualifications or competency in a given area. For example, some SMSF Advisors cannot include insurance, estate planning and other types of advice and set up and monitor investment portfolios.
The ‘best-interest’ duty is a mandatory standard for Financial Advisors, introduced and implemented by the Australian Government to ensure that personal advice and advice on products is tailored to an individual’s personal circumstances and what is most appropriate. Therefore, with holistic advice being a fundamental component of setting up and operating a SMSF, can scaled advice really be in the best interests of SMSF Trustees and their Members when setting up and running a SMSF?
Baggetta & Co offer a complimentary no-obligation consultation to clients looking to set up a SMSF, or SMSF Trustees looking to change Advisers, to see if our services are the right fit for you and your needs.