When starting a self-managed superfund, a common question is whether you need SMSF setup advice from a licensed financial adviser. The short answer is NO. There is no legal requirement to obtain advice from a licensed financial adviser before setting up an SMSF.
However, obtaining SMSF setup advice from an adviser, especially an adviser who is a recognised SMSF Specialist Advisor (SSA ®), can be extremely valuable when starting your SMSF journey.
What is SMSF setup advice?
SMSF setup advice is formal, written advice provided by a licensed financial adviser that recommends that an SMSF is appropriate for your needs. A recommendation to set up an SMSF is considered financial product advice. Even though an SMSF is a structure (a type of trust), a member balance within an SMSF is considered a financial product, so in practical terms, SMSF setup advice is considered financial product advice.
The critical aspect of whether something is SMSF setup advice is whether there is a specific recommendation or statement of opinion to set up an SMSF or anything intended to influence your decision to set up an SMSF. For this reason, many accountants are understandably nervous when discussing setting up an SMSF unless they are licensed to provide financial advice. More on this point is below.
Benefits of SMSF setup advice
I’m an advocate for financial advice. Although, at the time of publishing this article, myself and Grow SMSF are not licensed to provide financial advice, I frequently refer people to financial advisers. Essential items that a financial adviser can advise on include:
- Whether an SMSF is suitable or not (SMSF setup advice);
- How much to roll over to your SMSF;
- Appropriate insurance cover to be held by your SMSF;
- Construction and implementation of your SMSF investment strategy;
- Making additional super contributions;
- Commencing a pension;
- SMSF estate planning;
- Winding up an SMSF;
The above list of SMSF advice items is the tip of the iceberg. There are also intangible benefits, including the ‘sleep at night’ factor, knowing that a professional assists you to ensure you get the best outcome with your SMSF. A financial adviser can also be important in preventing fraud and acting as an independent person to verify the legitimacy of investment opportunities.
Do I need a financial advisor to set up an SMSF?
No. There is no legal requirement to obtain SMSF setup advice from a financial advisor before setting up an SMSF. If you’ve already decided to set up an SMSF, you do not need to see a financial adviser. As outlined above, using a financial adviser has many additional benefits.
If you are unsure whether an SMSF suits your circumstances, you should speak to a financial adviser and obtain SMSF setup advice. If you’ve already made the decision that you want to set up an SMSF, there is no requirement for you to obtain (and pay for) SMSF setup advice.
Do you need an accountant to set up an SMSF?
Many accountants will only establish a new SMSF for a client where advice has been provided (generally in the form of a Statement of Advice – SoA). There are a few reasons for this.
Accountants have a professional obligation to ensure their clients are looked after. Referring you to a licensed financial adviser helps ensure you get the best possible outcome.
Because your existing accountant has insight into your financial situation, and you receive their advice on tax and business financial matters, any action they take or conversation they have with you about starting an SMSF could be considered SMSF setup advice. An accountant cannot provide financial product advice. They can provide taxation and compliance advice.
By contrast, if you’ve decided to set up an SMSF and then contact a provider to set up an SMSF, it’s unlikely delivery of the SMSF setup service would include any personal advice. There has been no opportunity for the provider to influence your decision on a financial product. The provider has no information about you, meaning no SMSF setup advice is provided.
Who can help me set up a self-managed super fund?
When you submit an online order for a new SMSF with Grow, you are NOT receiving SMSF setup advice. You agree to the Terms of Service and also accept our Advice Disclaimer.
The Grow SMSF setup process includes the following key items:
- Registration of a special purpose trustee company;
- Provision of an SMSF trust deed via our legal document provider;
- Registration of the SMSF with the ATO;
- Information on how to set up the bank account and/or trading account for your SMSF*;
- Instructions on how to transfer super to your SMSF account via SuperStream.
*This information is only provided upon request when you actively select to receive the information during the SMSF setup process.
It’s possible to complete all of the above items yourself if you are a genuine ‘Do-It-Yourself’ person. For example, anyone can register a new company directly with ASIC, and numerous legal document suppliers can sell you an SMSF trust deed. You can also apply for an ABN directly with the ATO and go to most major banks to open an account for your newly minted SMSF. You can also use an independent SuperStream ESA provider to transfer your super monies to your SMSF account.
None of the above items requires you to see a financial adviser or accountant or obtain SMSF setup advice to set up the SMSF.
SMSF Setup Advice FAQs
The following are short answers to other common questions about setting up an SMSF:
Do you need a Statement of Advice to set up a SMSF?
- No. There is no requirement to obtain a Statement of Advice (SoA) from a financial adviser to set up an SMSF, however financial advice can be valuable in many circumstances.
How much does it cost to set up a SMSF?
- The current Grow fee for setting up a new SMSF is $1375, including the ASIC registration fee, SMSF trust deed, ATO registration, and all minutes and documents necessary to get your SMSF up and running.
Can I start a SMSF with $100,000?
- There is no mandated minimum when it comes to setting up a new SMSF, but it is one major factor the ATO will look at when deciding whether to approve your new SMSF. More information here: How much super do you need to set up an SMSF?
How much super do you need to set up an SMSF?
- The ATO requires no minimum balance. to set up an SMSF. Based on outdated information from ASIC, some industry and retail super funds (and even financial advisers) will say that you need at least $500,000 for an SMSF. This is incorrect and not supported by independent research. More information: How much super do you need to set up an SMSF?
What is involved in setting up an SMSF?
- Learn more about the key steps to set up an SMSF here: Steps to set up an SMSF
Can I setup an SMSF myself?
- Yes. It is possible to set up an SMSF without the help of a financial adviser, accountant or specialist SMSF provider. Refer to the above information Who can help me set up a self-managed super fund?
Can 1 person have a SMSF?
- Yes. A single-member SMSF is easy to set up. You need to use a company trustee because one person cannot act as both the member of the SMSF as well as the sole individual trustee.
Can I reimburse myself from the SMSF for the setup costs?
- Yes. Once your SMSF has been set up and has cash in the bank account from contributions or rollovers, you can reimburse the SMSF setup costs by making a payment to a personal bank account and using the narration “SMSF setup cost” or similar.
Can I pay myself to manage my SMSF?
- No. There are some exceptions for public practice accountants and licensed financial advisers who provide their services to the public. Still, most trustees can only reimburse themselves for expenses incurred in managing the SMSF and its investments.
Questions and Comments?
SMSF setup services and how they fit into financial advice is a controversial topic among accountants and financial advisers.
Grow SMSF is not licensed to provide financial advice, and use of our SMSF setup service is only appropriate where you’ve decided to setup an SMSF.
If you have any questions or would like to share your experience as an SMSF trustee, please comment below.