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Accountants Exemption Solution

Why SMSF Trustees Need Advice on Investments (RG146 training)

According to Colonial First State, SMSF trustees who invest without the assistance of a financial planner are at greater risk of behavioural biases that typically surface during the peak of a financial crisis.

It stands to reason that with a significant amount of SMSF deposits sitting in bank accounts or term deposits they are struggling to meet inflation.

Colonial First State head of investment sales Laird Abernethy warned SMSF trustees who invest “without the discipline and supervision of a financial planner” may hamper their investment as “without a financial planner they are more likely to exit at the very worst time in a financial crisis.”

The message is clear for accountants: review your SMSF clients and invite them to review their investments with a financial adviser.

David Itzkovits, Head of Investments at Sanlam Global Investment Solutions said it is important to remember there is a “difference between investor and investment returns”.

“There’s a company, Deakin, in the US that actually quantified this – they did a quantitative analysis of investor behaviour,” he explained. “They looked at the average mutual fund equity investor versus the S&P 500 over 20 years and what they found is that the average mutual fund equity investor underperformed the S&P 500 every year.”

Mr Itzkovits said the underperformance was generally by a significant margin of more than 50 per cent.

“This is because investors make bad decisions, they get in and out at the wrong time,” he said.

Mr Abernethy said investing in managed funds that are exposed to equity indexes but use exchange-traded equity future contracts to reduce volatility may alleviate some of the sequencing risk concerns retirees or SMSF trustees looking to retire might have.

“This allows them to have exposure to equities in a more protected manner so they can get access to the equity risk premium on equity returns without the volatility and sequencing risk issues that they might have in a naked equity type product.”

James Barger-Bos, CEO of finance wise, explained the lack of sound advice at the commencement of the SMSF made it more difficult for advisers to match the asset allocation to the risk profile of the trustees but not impossible.

“My strategy is to work closely with trustees and maintain regular communication, set reasonable expectations and continually educate them.”

Are you ready to keep offering SMSF advice when the accounting exemption expires?  We have a clear, simple and cost effective solution to the accountants exemption expiry.  Ask us about it at or register your interest today.

Finance wise offers face-to-face RG146 training with courses scheduled in Sydney, Adelaide and Perth.

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