Financial planners wanting to succeed in the self-managed superannuation fund (SMSF) arena need to reposition themselves away from conventional advice models, according to SMSF Strategies principal Grant Abbott.
“Those advisers who are looking to deal with SMSF clients should not use the term financial planner. It will never work inside an SMSF,” Abbott said.
“They are far better sticking to the law and the law says that every fund must have a written investment strategy. And that investment strategy has to look at the risk involved in holding an investment and cashflow needs,” he said.
“This legal obligation creates a great opportunity for financial planners to present themselves as investment strategists for SMSFs. It doesn’t mean they’ll become brokers and they can keep the term financial planner for their other clients.”
In this context, Abbott pointed out it was critical for advisers to know the tax laws and the superannuation laws in detail to allow them to construct an appropriate technical strategy for their clients.
“If they can get the technical strategy right then they can put together an optimal investment strategy that fits that technical strategy,” he said.
Abbott pointed out an even greater opportunity exists for advisers to actually implement investment strategies properly, given the flawed way most SMSFs currently deal with this critical requirement.
“An investment strategy is something that should be forward looking. What happens at the moment is effectively people go some months down the track after year end and their accountant will draft up a document that says ‘this is the investment strategy the fund applied 18 months ago’ and that is not an investment strategy,” he said.
