Article - Sydney Morning Herald

Self-managed super funds offer great flexibility, but concerns that they are being oversold continue to surface.

The financial adviser Crystal Broadfoot says she is dismayed at the number of people she is seeing who have been poorly advised to set up a self-managed super fund (SMSF) - frequently because they have been drawn by the buzz around holding property inside your own fund. "We do see the need for (DIY funds) in certain and limited situations, and that’s generally with your high net wealth, high super-balance clients," says Broadfoot, of the Melbourne-based firm Clements Dunne & Bell, a member of the Count Financial group. "But we are dismayed at the amount of clients who come to us who have been, what we feel, incorrectly set up with an SMSE"

PROPERTY SPRUIKERS
Those people either have very low balances or rely totally on platform administration services, "which defeats the purpose of an SMSF" and adds an extra, expensive layer of fees to the costs already involved in having a DIY fund, she says. Broadfoot sees a connection with the rule change that allowed DIY funds to borrow to invest, which has drawn property promoters to the SMSF sector. A wealth management partner at HLB Mann Judd Sydney, Jonathan Philpot, has similar concerns. "Many property spruikers are encouraging people with super balances of $50,000 and even less to purchase a residential property in their SMSF, with the property being geared to about 70 per cent," he says. Read more

Article published by Lesley Parker in Sydney Morning Herald on 10 October 2012.