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Better advice standards – not structural changes – will improve protection for SMSF investors: Hewison and Associates Cooper Review submission

John Hewison
Founder and Director
17 Feb 2010

Rather than place greater restrictions on self-managed super fund investors the Super System Review should focus on raising standards of advice and education for advisors to better manage risk in the SMSF sector, according to private wealth management firm Hewison and Associates in its submission to Cooper’s Superannuation System Review.

Hewison and Associates, which is one of Australia’s largest independent financial advisory firms managing $340 million in funds under management and around 900 client investment portfolios of which 400 are in Self Managed Super Funds, says there is no need for major change to substantially improve the SMSF factor, and that too much change could be detrimental to investors in the sector.

Instead Hewison is calling for improved education and advice standards to provide better protection for SMSF investors and trustees. These standards would include mandatory specialist education requirements for advisers offering SMSF advice and the abolition of the accountants SMSF advice exemption.

John Hewison, CEO of Hewison and Associates says the existing financial advice education requirements are too basic for areas as complex as self-managed super.

“The current minimum qualification for a financial planner, RG146 under the FSR Act, can be obtained in as little as six weeks. This level of education is obscenely low to be giving any type of financial advice, let alone advising in an area as complex as self-managed super where specialist investment and regulatory knowledge is required.

“We want to see the education standards for SMSF advice raised by introducing specialist education requirements, in addition to holding the higher Certified Financial Planning qualification, for any adviser providing guidance on SMSF, ,” he said.

Hewison also believes the current exemption that allows accountants to provide advice in relation to establishing an SMSF but not specific investment advice should be removed.

“Advisers putting clients into an SMSF really should have specific skills in this area. The current arrangement which allows accountants to advise a client to set up an SMSF but not advise what can go into a fund is creating a two tier scenario in relation to SMSF advice and putting investors at risk of only being given part of the picture,” said Mr Hewison.

In its submission to the Superannuation System Review, Hewison has also called for the government to reinstate concessional contribution caps to encourage retirement savings.

“We’re seeing greater scepticism and uncertainty about superannuation at the moment, particularly amongst investors who’d prefer to wait and see what further changes are made to the system rather than direct surplus funds into super.

“In particular, the reduction of concessional caps in the last budget was a step backwards and these should be reinstated. We have a great fear that further discouragement in this manner will bring about increased use of gearing investment to achieve taxation efficiency, which is not the desired approach given the need to promote savings for retirement,” Mr Hewison said.

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About Hewison & Associates:
Hewison & Associates is one of Australia’s largest independent wealth management firms, specialising in high end financial planning and investment advice to Australian individuals and families, portfolio management, and Self-Managed Superannuation Fund administration. The firm manages around 900 individual client investment portfolios currently valued at $340 million, of these investment portfolios 410 are Self-Managed Superannuation Funds.

Hewisons is a fee based firm which does not accept commissions of any kind. It pioneered Individually Managed Accounts in the early 1990’s and its clients’ investments portfolios are structured in this manner with investment portfolios consisting predominantly of direct investments diversified across the five main asset sectors.

Download article Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.