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Wealth: Self-Managed-Super-Funds face industry changes Posted on January 21, 2020

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What is changing?

Self-Managed-Super-Funds are facing increased scrutiny from governing bodies, which will result in increased compliance and audit activity, and will likely impact associated fees.

Why is it changing?

For good reason: optimum fund performance for members in retirement.

Governing bodies, including the Financial Planning Association of Australia (FPA) and the Australian Securities and Investments Commission (ASIC) are driving this change to ensure funds are designed to meet the objective of providing wealth for members in retirement, through diversified investments, and regular monitoring and review by the trustees.

This has seen the update and recent release of the Financial Advisor Standards and Ethics Authority (FASEA) FASEA Code of Ethics. From January 1 2020, ASIC will facilitate industry compliance with the Code until there is a single industry governing body implemented this year.

As authorised Financial Planners and professional facilitators of many SMSFs for our clients, AdviceCo. is required to comply with the Code. We are supportive of both the code and this compliance process as it is in line with our own professional values and helps our clients to know that we are honest, fair, diligent, competent and trustworthy.

What does this mean for SMSF holders?

Above all else, it means you can be confident that your SMSF is overseen by experts who value compliance. This is the single best way to drive sustainable wealth of your fund.

It does also have governance implications, including increased auditing of funds and its associated fees. This is something that all fund holders and managers should be preparing for.

Similarly, it will require regular engagement with your fund. SMSF’s need to have:

  • An investment strategy that is updated on a regular basis to reflect your changing circumstances.

  • A risk management plan and review process, including diversification of your investments plus insurance, so that your wealth can be managed through unforeseen events in the markets and/or your circumstances.

  • A real-time reporting structure that will not only give you regular and ongoing visibility of your fund’s performance, but that will support you in the case of an audit.

Complacency will kill your investment strategy. One of the great benefits of a SMSF is greater control, and with control comes responsibility. Regular engagement with your fund and Financial Planner will ensure your investment strategy is on track and that you benefit in your retirement.

To understand how you can set your SMSF up for success through this industry evolution, please contact us.

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