ASIC document on SMSF advice costs questioned

In a statement released on Monday, SMSF Association chief executive John Maroney said that while the association agreed that SMSFs were not suitable for every client, the data used by ASIC in its fact sheet, “Self-managed superannuation funds: Are they for you?”, distorted the costs involved in running a self-managed fund.

“We take issue with the representation that the typical cost of running an SMSF is $13,900 a year,” Mr Maroney said.

“The use of averages ignores distortions from very large SMSFs and those who choose to use extensive administration and investment services.”

He said the association would seek further clarification from ASIC on its use of this figure in the fact sheet, given that industry data indicated the annual expenses involved in running an SMSF could be as low as $5,000.

In addition, the SMSFA took issue with the regulator’s claim that SMSFs with balances below $500,000 underperformed APRA-regulated funds, given it was hard to make an accurate comparison between the two.

“For example, SMSF establishment and advice costs vary considerably to the costs incurred by APRA-regulated funds, in the process materially distorting SMSF returns, especially for new and lower-balance funds,” Mr Maroney said.

“We also argue that the cost-effectiveness debate must be extended beyond a mere analysis of net returns and costs and consider the cost of running an SMSF over the long term, as well as the varied motivations that SMSF members have in setting up their own funds, such as increased control and their individual retirement goals.”

The comments come following ASIC’s announcement of a forthcoming pilot program to send its newly published fact sheet on SMSFs out to all new SMSF trustees in November.

The fact sheet is aimed at getting trustees to consider whether an SMSF is appropriate for them, following concerns from the corporate regulator that the volume of assets in the SMSF sector may be growing too fast.