STRATEGY
A radical SMSF approach – part one The scrutiny and accountability applied to SMSF trustees may make the requirement for all members to fulfil this role impracticable. In part one of this two-part series, Grant Abbott examines the case for a single-trustee structure for SMSFs.
GRANT ABBOTT is a director of I Love SMSF.
It is commonly accepted every member of an SMSF also must be a trustee of the fund, but given the ever-increasing scrutiny and accountability being levelled at trustees, this structure may no longer be practicable. In this article, over two parts, my goal is to completely change your thinking on the way an SMSF should be run and managed. I know people generally hate change, but if there is a better way, one that advantages your client, simplifies SMSF administration and improves compliance, wouldn’t you want to know about it? And as SMSF advisers we need to be able to change and change quickly. COVID-19 has certainly taught me that change can
quickly wash over us, so it is better to be adaptable when change hits. Now I want to ask you one simple question. If being a trustee of an SMSF was optional for fund members, what percentage of your SMSF clients, understanding the high expectations and responsibilities of acting as an SMSF trustee, would stick to membership only and abandon trusteeship?
The dangers of SMSF trusteeship There are more than 3000 pages of laws, regulations and commissioner’s guidelines when it comes to SMSFs, so there are very real dangers for any member to act as an SMSF trustee in 2020. We are no longer in the early cowboy days of SMSFs of the 1990s or the Simpler Super days of the 2000s. It is 2020 and things have changed. I talk with accountants and planners all day long about SMSFs and one thing they all tell me is over the past five years things have gotten tougher and tougher for advisers, licensees and trustees in the SMSF space. Take for example the current investment strategy requirements for SMSF trustees contained in section 52B(2)(f) of the Superannuation Industry (Supervision) (SIS) Act 1993. Since 1994, creating one-page investment strategies with 1 to 100 per cent asset allocations has been the norm. Having worked in the funds management industry and been part of writing prospectuses for balanced retail super funds, having real benchmarks for each asset class was my norm, but it is hard to change an industry and my detailed SMSF investment strategy musings often fell on deaf ears. But I always remind myself of a quote from Frank Abagnale: “The law sometimes sleeps; it never dies.” So it was no surprise to me when the Continued on next page
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