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Issue 27 - October 2016

SMSF advice: Our top 10 tips

 

Taking into account the client’s individual circumstances is the main consideration when providing advice on the suitability of a self-managed superannuation fund, according to the FOS Lead Ombudsman Investments and Advice, June Smith.

She outlined the FOS top 10 tips for financial planners, advisors, accountants and other practitioners on providing SMSF advice in a panel presentation at the recent FOS National Conference.

Some of the key questions she suggested practitioners ask themselves when recommending an SMSF to a client are:

  1. What does the client want to achieve by establishing an SMSF and have we achieved that?

  2. Is the strategy suitable for this client?

  3. If it involves the rollover of an existing fund, was the switching advice appropriate given the characteristics and performance of the existing super fund?

  4. Have insurance issues been adequately identified and addressed for the client?

  5. Is the client capable and clear about trustee responsibility?

  6. Does the client know about the costs of administering the SMSF?

  7. Does the client understand the roles and fees associated with all related aspects of SMSFs including advice, investments, establishment, legal and administration?

  8. Did we explain the risks (against the benefits) of establishing an SMSF?

  9. Does our role include the development and management of the investment strategy and if so, is the advice appropriate?

  10. If the SMSF is to engage in borrowing or gearing, is the level and affordability of the gearing appropriate?

June also stressed the importance of proper record keeping, should a dispute arise.

‘The client file should represent the journey the client and the practitioner go on together,’ she said.

‘We encourage practitioners to make sure that the recommendations they make to their client and their client’s instructions to them about the advice are fully recorded on that file. Accurate file noting and accurate recording of discussions are very important.’

See the key determination about advice and the establishment of an SMSF in this issue.

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