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ASIC removes minimum threshold from SMSF guidance
The Australian Securities and Investments Commission (ASIC) has decided to remove a $500,000 as an indicator of the ‘appropriateness of advice’ to establish a self-managed superannuation fund.
In updated guidance to SMSF advice, the regulator opted to no longer nominate a minimum threshold.
It did point out that fund expenses were proportionally higher for an SMSF and net returns were lower for low-balance funds.
SMSF Association deputy chief executive and director of policy & education, Peter Burgess, said the move was a “significant breakthrough” and followed research by the University of Adelaide that there was no material difference in performance for SMSFs between $200,000 and $500,000.
He said: “In particular, references in ASIC INFO 206 to SMSFs with balances below $500,000 as having lower investment returns and will often be uncompetitive compared with APRA-regulated funds was at odds with the findings of the University of Adelaide research conducted on a sizeable proportion of the SMSF sector.
“It’s worth repeating that the University of Adelaide research found no material differences in performance patterns for SMSFs between $200,000 and $500,000, so the notion that smaller SMSFs in this range deliver materially lower investment, on average, than larger SMSFs in this range is not supported by the research. The research shows that a more appropriate threshold is $200,000.
“So, it’s extremely pleasing that the regulator has taken heed of this research and our representations on this issue and has removed references to the $500,000 threshold.”
However, he noted SMSFs which were less than $200,000 were likely to achieve considerably lower net investment returns than those with a higher volume of assets.
Burgess also welcomed ASIC’s comments about the need for advisers to have specialist knowledge about SMSFs.
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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