ASIC releases findings of SMSF advice review

TL;DR

Report finds that a significant number of self-managed superannuation fund files reviewed had compliance issues, with clients often worse off as a result of the advice given.

Transcript

g'day and welcome to this week's video this week we're gonna have a look at self-managed superannuation funds and in particular a report that was released in June 2018 they looked at the AOC improving the quality of advice and also looking at the members experience and what asset did was they reviewed 250 files where advice was provided where recom... Read More

Key Insights

• 🤳 91% of self-managed superannuation fund files reviewed did not comply with the law.
• ☸️ Approximately 10% of clients suffered significant financial harm due to the advice given.
• ◾ Issues included poorly setup smaller super funds, lack of insurance coverage, and inadequate consideration of existing funds.
• ✳️ Property investments recommended by financial advisors posed significant risks.
• ❓ Retail investors and industry professionals should be concerned about the findings of this report.
• 🥶 Resources for understanding superannuation and free online courses are available for young people.
• ❓ Compliance with the regulator's recommendations is important for the protection of clients' interests.

Questions & Answers

Q: What percentage of the reviewed files did not demonstrate compliance with the law?

The report found that 91% of the 250 files reviewed did not demonstrate compliance with the law.

Q: What proportion of clients were worse off due to the advice given?

Approximately 10% of clients, equivalent to 26 files, were significantly worse off because of the advice provided.

Q: What were some of the concerns raised regarding the setup of self-managed super funds?

The report highlighted that two-thirds of the reviewed self-managed super funds were set up with balances below $350,000, making them cost-inefficient. Additionally, insurance coverage and consideration of the client's existing funds were not adequately addressed.

Q: What was the main concern regarding property investments recommended by financial advisors?

The report revealed that 61% of advised self-managed super funds intended to invest in direct property, particularly new apartments. This can pose risks due to lack of diversification, high debt, and illiquidity.

Summary & Key Takeaways

• A report reviewed 250 self-managed superannuation fund files and found that 91% did not demonstrate compliance with the law.

• Approximately 10% of clients were significantly worse off due to the advice given, and nearly 20% faced an increased risk of future financial detriment.

• The report also highlighted concerns regarding the setup of smaller superannuation funds, lack of insurance coverage, and poor advice regarding trustees and existing super funds.