Lesson type: Self-Improvement

Warning: When advice isn’t advice

Just before Christmas, the Australian Securities and Investments Commission (ASIC) issued a warning about super spruikers operating in the Coffs Harbour area.

How do spruikers operate?

The spruikers made a fairly simple sales pitch to people, whom they’d often directly approach in shopping centres or on the street. First, they’d suggest rolling over super savings into an SMSF, use those savings to pay off debts or buy property (among other options) and do all of this without paying any upfront fees.

ASIC noted that running an SMSF is a “complex and costly process, and consumers could end up losing a significant amount of money if they get it wrong.” The regulator added that breaching the ATO’s superannuation rules could result in fines of up to $16,800.

To ensure you’re making the right decision when considering rolling over your super savings, ASIC said, it’s important to verify the person you’re talking to either holds or is an authorized representative of an Australian financial services license. You can check this using ASIC’s Financial Advisers Register.

Slowing SMSF growth

We’ve previously discussed how the rate of people starting new SMSFs fell to a 10-year low last year. The SMSF boom arguably began in 2010, when the establishment rate hit 9.3%.

There are now nearly about 600,000 SMSFs in Australia, representing over a million people and $700 billion in funds. Some of the most popular reasons for starting SMSFs were control over one’s investments, the ability to hold more wealth in “unusual” assets like art and a general post-GFC distrust towards handing the reins over to large financial institutions.

This is now changing, though, due to a range of factors including issues with smaller balances underperforming relative to traditional super funds, costs of administration and regulatory changes.

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