What you need is Individual

WHAT YOU SHOULD BE THINKING ABOUT YOUR SMSF

Q&A session by PPM with John Maroney, CEO SMSF Association

FOR SMSF TRUSTEES

1. What attracted you to the SMSF Association, why did you join?

I have always been involved and passionate about the Australian retirement system, where I spent most of my career before going to Switzerland. I was part of it when there were major changes happening in the ‘80s and now, 30 years later, we’ve got a lot of money and a lot of people in the system and it’s starting to get to that very interesting stage of what it’s all about, that is, helping Australians retire in a secure and dignified way. It’s an area of great interest and passion to me.

2. In the current volatile market what should trustees be focusing on in 2018?

Not only in 2018, but I recommend trustees gain Specialist SMSF advice in conjunction with their own education and research. In a volatile market it is recommended to diversify investments to help ensure a sound investment strategy.

“Trustees’ investment strategy should be tailored to their specific circumstances to suit their financial and retirement goals and SMSF Specialist advice is important in helping achieve that goal.”

3. What are the key trends impacting SMSF trustees? And how should they respond?

The main trend still impacting SMSF trustees is the implementation of legislative changes effective last year as at 1 July 2017. This has far reaching effects, not only on the day to day administration of their fund but also estate and succession planning. There are many moving parts that trustees need to consider and for that reason it is vital that they seek SMSF Specialist advice to assist them. We see wonderful results when trustees are working in sync with their trusted, professional advisors. Another trend, I have already touched on is the importance of diversification to ensure not all your eggs are in one basket, so to speak.

4. Many issues came out of the 2018 budget, out of these what will benefit the SMSF sector?

The fact that SMSFs were largely untouched in the Federal Budget goes a long way to further instil confidence in the SMSF and superannuation sectors. It is something we, as an Association, have advocated all political parties to carefully consider when contemplating superannuation taxation and retirement design. We want to ensure policy development is done on a holistic basis, not ad hoc with a short-term view or where other political motivations could further undermine confidence in the retirement system. However, increasing the maximum number from 4 to 6 members in a fund enables greater flexibility in estate planning and is a positive change to come out of the budget.

YOUR ADVISORS (FINANCIAL ADVISORS AND ACCOUNTANTS)

5. What is your view on complying with the new education and ethical requirements and the expanding Best Interest Duty?

We are supportive of the Government’s decision to establish FASEA, recognising its important role in overseeing the educational and training standards of financial advisors, as well as establishing a solid Code of Ethics. Our Association believes it is another positive step to improve the training and educational standards of advisors, and it is an issue we have long advocated for.

6. What challenges do you see facing SMSF trustee advisers in the next 5 years?

Over the next 5 years we see a few challenges that both trustees and advisors will be facing. One of these challenges includes the implementation and management of transfer balance account reporting. This is an issue that will have a substantial impact on SMSF administration and will need to be closely monitored as part of day to day fund responsibilities.

Another challenge is the diversification of investment portfolios to ensure robust investment strategy and the ability to minimise unnecessary risk to achieve long-term goals.

The potential uncertainty in superannuation, including the recent franking credit policy debate and the integration of retirement policy, is also a constant challenge that the sector faces.

7. Obviously you cannot recommend a fund manager but what are SMSF trustees looking for in investment management?

I cannot recommend a fund manager, but some guiding principles I would offer to SMSF trustees include:

• Strong relationship and understanding between advisor and trustee is paramount.
• Ensure adequate diversification of your portfolio to satisfy a sound investment strategy.
• Increased transparency in investment management is important.
• Look for a fund manager with a strong history of solid returns and competitive fees.
• Fund managers with a high level of relevant and specialist knowledge and up to date skills are best placed to guide your investment strategy.

 THE FUTURE OF THE SMSF ASSOCIATION

8. What direction do you see the SMSF Association heading in over the next 12-18 months?

The federal election, which will inevitably happen in the next 12 months is a big focus for the SMSF Association. We’ll be looking at the general issues but also focussing on the budget and of course the threat from Labor’s franking credits proposal which very much targets SMSF trustees. We will be informing trustees and our clients we strongly oppose this proposal and running up to the election this will be a much bigger issue.

We will also be focussing on education in the next 12-18 months and will look at how we can work with higher education providers a lot more closely. We are all waiting to see what FASEA finalise in terms of guidance in the next few months and we will look at revising what we do in the higher education space.

Of course what will happen post Royal Commission findings will determine how we go about doing this. Trustees and investors need to be informed about best practice.

9. We see the SMSF Association more active in the conference space. Can you please discuss the associations direction and perspective on this?

The SMSF Association has been active in holding conferences and face to face events for SMSF professionals across the country for many years to resounding and continued success. We are wanting to provide SMSF trustees with flexible learning opportunities including online education via our Trustee Knowledge Centre and face to face events such as the SMSF Trustee Day “Your SMSF in Focus” Event held in Sydney (on May 14th) where they can connect with like-minded individuals, ask questions of SMSF experts and discuss the latest issues in the sector.