Choose a financial adviser
Choosing the wrong SMSF financial adviser could cost you thousands in penalties, poor investment returns, and compliance failures. With over 600,000 SMSFs managing $876 billion in retirement savings across Australia, selecting qualified professional guidance has never been more critical.
Not all financial advisers have the same SMSF expertise. Making informed decisions about your SMSF requires guidance from a qualified professional who understands your needs.
Key takeaways
- There are different forms of advice with different obligations.
- A financial adviser must be certified to legally provide financial advice to clients.
- Look for advisers that can provide comprehensive advice related to SMSFs.
- Your adviser should be able to tailor their communication to suit your understanding.
- Your financial adviser must be transparent with their fee structures.
- Financial advisers must manage their conflicts of interest.
- Prepare questions before attending an initial consultation.
SMSF Important Considerations
Self-managed superannuation funds involve significant responsibilities and risks. As a trustee, you’ll be personally responsible for:
– Compliance with superannuation and tax laws
– Investment decisions and their outcomes
– Administrative requirements and record-keeping
– Potential penalties for non-compliance
SMSFs require substantial time, knowledge, and ongoing attention. Consider whether you have the expertise and resources to manage these responsibilities effectively.
Understanding SMSF Financial Advice Requirements
Financial advice comes in different forms. This is important to consider because an adviser’s obligations vary depending on the nature of their advice. You may receive:
- General advice. This kind of advice doesn’t take a client’s personal situation into account. It needs to come with an advice warning.
- Personal advice. This is advice that is tailored to the client’s current financial situation and financial goals. The adviser must provide a statement of advice.
Essential Qualifications Every SMSF Adviser Must Have
Many people turn to friends and family for personal financial advice. But when you’re managing your financial future, the standards must be high. SMSFs are financial products. In Australia, we ensure the quality of professionals in finance through certifications and licences. Here’s what to look out for:
- Australian Financial Services (AFS) licence. An AFS licence is essential for anyone operating a financial services business or providing advice to clients. The licence is issued by the Australian Securities and Investments Commission (ASIC). Personal advice providers and most general advice providers require an AFS licence.
- SMSF Specialist Advisor (SSA). The SSA accreditation is an industry-leading designation. It is awarded by the SMSF Association. An SSA on its own doesn’t permit a person to give advice about SMSFs. It must be held in addition to an AFS licence.
- ASIC’s Financial Advisers Register. This register lists all individuals authorised to provide personal financial advice in Australia, including both AFS licence holders and authorised representatives. The register is particularly helpful because it provides information on a provider’s qualifications and work history. An adviser may also act as an authorised representative of an AFS licensee.
ASIC also maintains a list of banned and disqualified individuals and organisations. If you’re assessing someone as an adviser, being listed in this register is an immediate no-go.
Key Services Your SMSF Financial Adviser Should Provide
Financial services cover a broad set of topics. A self-managed super fund involves many of them. As a trustee, you’ll deal with tax considerations, investment strategies, and compliance requirements, among other matters. It’s important to select an adviser who’s equipped to help you navigate these issues within SMSF laws.
SMSF Tax and Compliance Support
An SMSF has many moving parts. These are some of the areas that your adviser should be able to help you with:
- Taxation – SMSFs have tax obligations. But they can also benefit from concessions. A good adviser helps you explore available tax concessions.
- Tax Advice – Licensed financial advisers can assist with SMSF-related taxation strategies and investment planning. FAA works alongside authorised representatives of Lifespan Financial Planning Pty Ltd (AFSL 229892) and qualified tax professionals to provide coordinated support for your SMSF, specific tax advice should be obtained from a registered tax agent. FAA works with qualified tax professionals to ensure comprehensive support for your SMSF.
- Compliance – SMSF trustees have a lot of responsibilities. Just to scratch the surface, you must:
- Develop and review an investment strategy.
- Prepare financial statements.
- Organise an annual audit.
- Lodge an SMSF annual return with the Australian Taxation Office.
- Keep accurate records.
- Investment advice – An SMSF provides access to a broad range of asset classes. Your investment strategy must consider its diversification and allow for enough liquidity to cover the fund’s benefit payments to members. A licensed adviser can help you understand your risk tolerance and explore investment options that align with superannuation law that may be appropriate.
- Broader retirement plan – Your retirement is about more than your superannuation interest. Work with a licensed adviser who can help you with matters like estate planning.
Communicating with a good financial adviser
You may have experienced how impenetrable financial matters can sometimes seem. Choose an adviser who’s able to break down complex financial subjects so you can understand your obligations. As the trustee, you’re ultimately responsible for ensuring that your fund remains legally compliant. Don’t make your job harder than it needs to be. Find an adviser who is able to communicate in a way that suits you. They should speak to you in a manner that’s tailored to your understanding of industry jargon.
Complaints process
Your financial adviser must have a complaints process in place. Under current ASIC requirements, they must acknowledge your complaint within 1 business day and provide a final response within 30 calendar days (with possible extension in complex cases). Request their Financial Services Guide for more information.
If your complaint is not resolved, you can contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678 or www.afca.org.au.
Fee transparency
It’s crucial that your adviser is entirely upfront with their fees. Under the Corporations Act, a company must provide you with a copy of its financial services guide (FSG). The FSG enables you to compare the fees and services of different advisers.
Other fees you may face include:
- Fee for organising a statement of advice (SOA) – This document details the advice given to you and on what basis. It should also clarify what payments or benefits the adviser will receive. This may be paid in a lump sum.
- Fee for review – This is a one-time cost for reviewing your plan and making any alterations if your circumstances change.
- Hourly charge – An hourly rate covers any one-off questions outside of the ongoing advice and services being provided.
Your adviser must get your written consent to charge you the agreed-upon fees each year.
Conflicts of interest
Avoiding conflicts of interest is one of the most critical parts of finding the right financial advice. Conflicts arise when a client’s best interests are not aligned with the adviser’s interests when developing a financial plan. Conflicts of interest can manifest in a wide variety of ways, for example:
- An adviser recommends that a client invest in a company of which the adviser is a director.
- A financial services company remunerates advisers entirely through broking commissions. They get paid by recommending that clients buy or sell a security.
- A product issuer owns a financial planner group that sells the parent company’s products only. However, the relationship isn’t clearly stated.
Conflicts of interest sometimes arise in financial services. The key is to disclose and manage them effectively, while prioritising the client’s interests. Ensure that their SOA is clear and not reliant on fine print and dense legalese. Don’t agree to anything that you don’t understand.
Questions to Ask When Choosing an SMSF Adviser
Some financial advisers will meet with you for a consultation to discuss their services. It’s useful to create a list of questions before the appointment.
- How long have you been advising on SMSFs?
- What services can you offer?
- How do you charge for your services?
- What is your authorised representative number on ASIC’s Financial Advisers Register?
- Do you work with other professionals?
- What is your policy on managing conflicts of interest?
From our clients
Disclaimer: The following feedback is the personal perspective of one client. It may not represent the experiences of all clients.
⭐⭐⭐⭐⭐
FAA are always responsive and supportive and provide prompt advice and assistance. You know our circumstances and SMSF arrangements very well and provide a more personal touch which we value.
– Keith faa.net.au
FAA’s greatest strength is its people. Our professional team have decades of combined experience assisting clients. We have experts in multiple areas of finance. This allows us to take a more holistic approach to retirement planning.
Conclusion
How do you find financial advice that will help with your retirement affairs? It can be difficult to know who you can trust with your money. These guidelines will help you identify a qualified financial adviser suited to your SMSF needs. You should expect full transparency and appropriate qualifications in advising on SMSFs. Use an initial meeting to determine whether an SMSF is right for you, as not all SMSFs are suitable for everyone.
Looking to learn more about SMSFs or connect with a licensed financial adviser?
Do you need assistance achieving your financial goals?
Contact FAA Group to arrange an introductory discussion. Financial advice is provided by authorised representatives of Lifespan Financial Planning Pty Ltd (AFSL 229892).
