In early August, the Australian Securities and Investments Commission (ASIC) quietly changed the definition of wholesale investor, which means that many SMSFs are now no longer classed as retail investors.
Previously, SMSFs had been classed as retail investors – and did not have access to wholesale products, with their often-cheaper fees, unless they had more than $10 million in funds under management.
Under the new definition, SMSFs will be deemed to be wholesale investors if they meet one of the six tests in s.761G(7), namely:
- product price exceeds $500,000;
- product/service is used in connection with a business (but not a small business);
- for the last two years, the person has assets of more than $2.5 million (accountant’s certificate);
- for the last two years, the person has income of more than $250,000 (accountant’s certificate);
- person is acting for a trust but they themselves meets any of the above tests; or
- person is a professional investor.
OR they meet all the tests in s.761GA, namely:
- their financial adviser is licensed;
- the product is not insurance, super or RSA;
- the product is not used in connection with a business;
- the financial adviser is reasonably satisfied that the client is experienced in these products; and
- the adviser tells the client they are so satisfied and the client acknowledges in writing.
(Source: Townsends Business & Corporate Lawyers)
The caveat, of course, is there is an increased ‘buyer-beware’ requirement, as wholesale investors do not need to be given a financial services guide or statement of advice.
Not ready
And in new research out today, it looks like white-collar workers in particular are ill prepared for their retirement.
An online survey of more than 1,500 household decision makers on finance aged between 50 to 80 years found that one in four white collar workers will live around four years longer than average, which means they underestimate their life expectancy by up to seven years.
The survey, conducted in July, also revealed that redundancy or illness forced 40% of people into retirement before they were financially ready.
“People understand we’re living longer, which means we need more money to last the distance, but expectations are disconnected to the reality of how to manage savings through retirement to ensure there’s enough to the very end, particularly if retirement happens earlier than expected”, Mercer’s managing director and Pacific market leader, David Anderson said in a statement.
Just 28% of those surveyed believe they will have enough money to retire when they want. So it’s time to make sure your expectations are in line with reality.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
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