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Tria critical of ‘loose’ investment strategy rules
Tria Investment Partners’ Andrew Baker has said the requirements around an SMSF investment strategy are “so loose there may as well be no rules”.
Speaking at an Association of Superannuation Funds of Australia luncheon earlier this week, Mr Baker discussed the requirement for each SMSF to have an investment strategy, saying “there are essentially no requirements other than you have a strategy and you review it”.
“It’s not so much the horse having bolted from a stable with doors left open, as in the stable having no walls,” Mr Baker said.
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“Whatever you can imagine, you’re probably going to find it in an SMSF somewhere. You can make investments to support your business… or you can make investment reflecting your personal interests, such as coins or art.”
Mr Baker also suggested the superannuation industry is not a level playing field, and is tilted in the SMSF sector’s way.
“SMSFs [are] competing for the hearts and minds of [collective funds’] members with promises of control, flexibility and making a difference to lives right now. It’s jam today, not just jam tomorrow,” he said.
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I vote for getting rid of investment strategies for SMSF's altogether. The vast majority of them are either written up by their financial planner or for those that don't have a financial planner - a stock standard generic print out from the software providers. They are filed and never referred to again. Every time an investment is made, trustees are considering it's appropriateness etc etc but not seeing the need to write it down. As for insurance - I really don't see why the trustees should have to consider it for the members. Especially since the trustees ARE the members. Surely the members can decide for themselves whether they need insurance with their member hat on rather than the trustee hat. And then they can also decide whether to get insurance in or out of super. I just don't see the point of these rules. Red tape for no result.0- But whose money is it? The existing in house asset rules are horribly drafted and biased against SMSF investment in non listed companies. Surely, it is up to members to control their investment philosophy. So far they seem to have better than the so-called professionals.0
- Without seeming to be abusive to Andrew Baker, I feel he is a man who is biased against SMSFs. He has said some silly things and generally gets thing half wrong. He tends to make comments without proper research. If he reads the comments here then I would expect him to either cease his comments or do proper homework first.0
- Great option, lets get rid of those stupid Investment strategies that SMSF have had thrust upon them because bigger fund s have to do it. As with all small business (and there are not many smaller than an SMSF), this is unnecessary red tape that they pay lip service to because they have to. Mind you, it is a way for the big boys to tie the SMSF in red tape so that if they cannot attract them with good quality products and service they can crush them with red tape. No there's a radical thought - developing products that they actually want instead of trying to force them with over regulation. If one actually tried it they may get run over in the stampede - haven't seen it yet but there is always hope.0
- We are talking about 4 member funds, not large funds who need an Investment Strategy to inform members and keep staff focused on their funds investments.0
- Vested interest Alert ....Vested Interest Alert .... Vested Interest Alert !!! ... When is Andrew Baker going to say something positive about the SMSF sector?0
- SMSF's are audited each year, Members have to be trustees and are fined if they breach the rules. So they do have significant responsibilities and therefore take them seriously. Further regulation is unnecessary!!0
- The suggestion that its not a level playing field seems unfair. There are different rules for public companies compared to private companies, and from public investment trusts compared to private investment trusts, and super is just the same. Different rules reflect the reality of the structure. Government doesn't set out to create an unlevel playing field. It sets out to regulate different parts of each sector based on their own specific factors. Its lobbyists and others who try and create an unlevel playing field by making calls for tighter regulation on others or less for their own sector nuder the guise of a better system. Its sas that so much time is spent by lobbyists, and taking up Government time and resulting in reviews and everyone else taking up time when we could all work together to improve the system, or spend the time with family and friends. I do know I'm being idealistic here, but it would be nice.0
- This topic came up in the Cooper review. The suggestion was legislation should be changed either to remove the requirement or to require much more detail.
The real world reality is that some people make detailed plans for various aspects of their lives while others don't. Requiring people to plan in legislation won't change that, but will add red tape and compliance costs for people who aren't planners. Given SMSFs tend to get quite good investment returns, there doesn't seem to be a need at that level for more regulation. There is a view that some poeple calling for tighter rules are really looking to increase SMSF costs and reduce the flow of funds from larger super funds.0 - How about implementing Prudent Investment Guidelines...broadly prescripting Asset allocation ranges for 'compliant funds' - for trustees to ensure their fund complies with at year end?0
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