The management of the fund and the performance of investments should be the main focus rather than the size of the SMSF, according to the Institute of Public Accountants (IPA) chief executive Andrew Conway.
Speaking to InvestorDaily last week, Townsends Business and Corporate Lawyers principal Peter Townsend noted that the high fees associated with SMSFs are the driving force behind the argument for prescribed minimums – but that fails to take returns into account.
“Would you rather have lower fees and lower return or higher fees and higher return? Because of the proportions, the upside is generally much greater than the downside, so the higher return more than compensates for the higher fees,” said Mr Townsend.
Mr Conway argued that while the administration could be more expensive for funds with lower balances, the trustees may decide to accept such costs based on the performance of the fund.
“The idea that fund performance should solely be measured by relative costs of administration misses the point,” said Mr Conway.
“Most people setting up an SMSF do so because they want control of their investments. Many trustees minimize costs by performing some of the SMSF functions themselves.”
Mr Conway stated that he hoped regulation would be less involved within the SMSF sector in the next few years and provide clearer guidance to regulators.
“The regulator needs to focus on issues like the quality of advice, removing conflicts of interest in the system and further education of trustees, not setting arbitrary figures,” said Mr Conway.
He also argued that unnecessary regulation should be avoided as it further increased the administration costs of SMSFs.
