Editorials

What’s wrong with recognising satisfaction?

ASIC SMSF factsheet

A factsheet from ASIC covering SMSFs has not only highlighted the wrong reasons people set up a fund but has used incorrect numbers to make its case.

The Australian Securities and Investments Commission (ASIC) recently released a SMSF factsheet to ensure individuals considering establishing a fund know what they were up for.

Unfortunately this factsheet, called “SMSFs: Are they for you?”, seemed to almost dwell entirely on the negative aspects of running your own super fund as opposed to many of the benefits that can be gained from it.

Moreover the corporate regulator referred to it as a factsheet but applying that terminology to the said document is a loose interpretation at best.

You see some of the so called factual evidence used as the basis of certain conclusions ASIC made were misleading and perhaps downright false.

I’m referring to the erroneous claim that a person requires a minimum retirement savings balance of $500,000 to make running an SMSF viable from a cost and performance perspective.

The Productivity Commission also nominated this figure but as most stakeholders in the sector will tell you it’s unsubstantiated rubbish. I mean if you think about it logically if this was true then just about nobody would have an SMSF.

Worse still, the factsheet claimed on average an SMSF costs $13,000 per year to run. Really? Where did ASIC pluck this figure from? And I don’t need to tell you because I’m sure the majority of the people reading this editorial would not be paying expenses anywhere near this amount on a yearly basis to run their SMSF.

The SMSF Association also refuted this number saying its understanding was an SMSF in the main incurred yearly expenses of under $5000. Quite a disparity.

Need I point out most of the criticism the “factsheet” has drawn focused on the negative nature it had toward SMSFs and for good reason.

I know I keep harping on this but the regulator and other bodies have shown a continuing obsession with cost when it comes to measuring SMSF suitability. Anyone with any empathy toward the sector knows this is an absolutely meaningless exercise.

Survey after survey has indicated the two most important elements for SMSF trustees are control and flexibility. It is particularly worrying when a regulator cannot or will not recognise this fact.

With this in mind we should all be thankful the ATO is the regulator for the sector and definitely has a better understanding of it.

To contrast this continued negativity toward SMSFs I will now share with you some more meaningful data recently sent to me that you probably won’t hear about.

It’s from a Roy Morgan survey on the satisfaction of superannuation returns over the past 20 years. The commentary accompanying the results said “over the last decade, Self-Managed Super Funds have generally been around 20 percentage points ahead of the other major players (Industry Funds and Retail Funds) in terms of satisfaction.”

Further the study showed, as at June 2019, 76.7 per cent of SMSF members were either very or fairly happy with the financial performance of their fund. This compared to 64.1 per cent of industry fund members and 58.7 per cent of retail fund members who felt the same about their retirement savings vehicles.

To me this is a slam-dunk. It shows no matter who it is that wants to continue to paint SMSFs in a bad light there is just no justification for it.

The truth is more than three quarters of SMSF members are satisfied with the financial performance of their fund and that’s all that matters.

It’s also proof government bodies should stop wasting time and money on stupid “factsheets” like this and reviews like that of the Productivity Commission that result in nothing less than idiotic findings and recommendations.

The tribe has spoken. If the majority of SMSF members love their funds then surely they are being established and run by the appropriate people. No need for doomsday like warnings. Case closed.

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