SMSF trustees without accountants are making more compliance mistakes

Friday, May 29, 2015

A third of SMSF trustees who do not use accountants are making consistent compliance mistakes, a third of which are deemed ”significant”, survey data has found.

Investment Trends research analyst Recep Ill Peker told SMSF Adviser at the Chartered Accountants Australia and New Zealand conference last week accountants are finding significant contraventions within the funds of new clients.

“We asked accountants of the new SMSF clients they’ve had in the past 12 months, how many were compliant in relation to regulations and requirements and the average accountant said only 68% were compliant,” Peker said.

He said the main contraventions were found in administration, failure to document investment policy, and general report keeping.

The Investment Trends report also found word-of-mouth referrals are playing a bigger role in influencing individuals to start SMSFs than the advice of accountants.

Peker said in the 1990s around 60% of SMSF trustees said they set one up because their accountant advised them to.

“That’s no longer the [the case]; only about 16% of those who set up an SMSF between 2012 and 2014 said they had [done so] because their accountant had told them to do so,” he said.

By comparison, 24% of those who intend to set up an SMSF in the future said they were influenced to do so by a friend.

“The top areas people are willing to pay for are all around retirement: if you look at the biggest cluster it tends to be around the age pension and estate planning and succession planning,” he said. “It’s a huge area of unmet advice, it’s a huge opportunity.”