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SMSF education standards ‘a disaster waiting to happen’
The new education and professional standards set out for the financial service sector last year have a gaping hole in the form of the SMSF sector, according to an industry consultant.
The new changes, which outline mandatory academic and professional requirements for the financial services community, must be extended to SMSF trustees, according to consultant John Wiseman.
“Trustees should be required to have a minimum level of education to undertake an SMSF and both the government and industry should be concerned by this lack of financial literacy and competency,” Mr Wiseman said.
“To have these responsibilities in the hands of someone who is not competent and academically qualified is a disaster waiting to happen and in the end, the only winners will [be] the legal fraternity as these situations will invariably end up in the courts.”
The current penalty for non-compliant trustees, often an education directive to undertake a course at their own expense, is not sufficient, according to Mr Wiseman.
“I liken the current SMSF situation as only requiring an unlicensed car driver to undertake a course to obtain a licence only if they are involved in a road accident”, he said.
“Regrettably, the real life casualties when these ‘financial accidents’ occur are invariably the spouse, family members, disabled [or] financially dependent children, business partners etc.”
Given this scenario, Mr Wiseman said it is vital that the government implement new legislation that ensures SMSF practitioners are educated and qualified.
“Investing in shares or buying [and] selling property inside SMSF frameworks is simply not an undertaking for the amateur [or] unqualified practitioner as the taxation implications and adverse impact on retirement nest eggs can quite literally be catastrophic when mistakes are made.”
Totally agree Ralph.
For those trustees wishing for, or requiring a formal level of training they should sign up for the SMSF Assoc Trustee Education Program. Excellent content and practical application.0- How about John becoming a mechanic before he drives his car every day.
And how about John becoming a brain surgeon and inserting a brain in his head before he makes such stupid comments.
This article and its consultant are ridiculous.0 - I don't think it's necessary for SMSF trustees to have a certain level of education as long as they are receiving the right advice. It's no different to the fact that anyone can lodge their own tax return, and potentially get themselves into a lot of trouble if they are not an accountant. Most people seek the advice of a tax professional for this task.
Maybe the rule should be that SMSF trustees MUST engage a SMSF professional (who must have a certain level of education in this area such as financial planner with degree & SMSF specialisation) for it to remain compliant, if they do not have this knowledge themselves.0 - Surely our consultant is not suggesting that all trustees be forced to undertake formal education and obtain a diploma / certificate. Apart from costing millions of dollars in fees (and I do wonder who Mr Wiseman consults for), it would lead to a belief that trustees do not need financial planners or accountants as they now have a piece of paper that says they are qualified.
"I liken the current SMSF situation as only requiring an unlicensed car driver to undertake a course to obtain a licence only if they are involved in a road accident” - that would be one of the more ridiculous analogies I have seen. I have met some incredibly successful trustees who have no sort of tertiary education but have taught themselves about share and property investing. Whilst there is a small minority of trustees who are out of their depth, most are either competent or hand the details to competent professionals.
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