When I tell people that Lime Super specialises in Self Managed Super Funds, I often hear the response “My accountant looks after my fund for me”. I’m not surprised I hear that response so often – most SMSF’s are administered by accountants who probably spend 5% of their time dealing with SMSF’s and most of their time doing audits, tax returns, GST, advice on growing profitability, advice on cashflow, advice on buying/selling businesses, tax advice, family trusts etc.
So it is also not surprising that around 20% of SMSF’s have been caught out by the ATO for exceeding their contribution limits in recent years, incurring huge tax liabilities. And some fund trustees have suffered larger penalties such as not being allowed to act as a fund trustee ever again. There is even potential imprisonment for some breaches. Barely a week goes by where the newspapers don’t write an article on how the ATO is cracking down on trustees that are breaching the rules.
It is also not surprising that most SMSF’s invest their money poorly – they are poorly diversified, and have an asset mix that is too aggressive or too defensive. What’s more, they don’t take advantage of the significant SMSF strategies that can save thousands of dollars of tax each year. All because most accountants do not specialise in SMSF’s, do not have time to keep up to date with the many rule changes (there have been about 6 major rule changes affecting SMSF’s so far this year), legally are not allowed to give financial advice to trustees of existing SMSF’s, and do not give their clients the tools to manage their SMSF effectively. The biggest issue is that the clients don't know any differently.
Please don’t misunderstand me. I have nothing against accountants. They can add huge value to their clients in the areas mentioned above – tax, audit, business advice etc. My only concern is that most of them don’t specialise in SMSF’s which is a technical area requiring specialisation.
Last year my wife gave birth to our beautiful daughter with a Caesarian birth. In the operating theatre was an obstetrician and an anesthetist. Later that day we met the pediatrician. Each of these professionals is an excellent doctor and a specialist in his/her field. Nonetheless I’m really pleased the pediatrician didn’t deliver the baby, and that the obstetrician didn’t give the injections. And I’m really pleased that my superannuation, which is my second biggest asset after my house, is managed by a specialist too.