The core body for self-managed superannuation funds in Australia has warned trustees to “look before you leap” following the planned release of “free SMSF” offerings.
The SMSF Professionals’ Association of Australia (SPAA) has fallen short of labelling the controversial free establishment service as “wrong”, but is encouraging consumers to be aware of what is involved in the services.
“It may be linked to an SMSF borrowing or may be used as a ‘catch’ for a more expensive on-going services that locks you in,” director of technical and professional standards Graeme Colley said in a press release yesterday.
“That old saying, there’s no such thing as a free lunch, comes readily to mind.”
In particular, extra costs, investment limitations and administration service are something to keep in mind when looking at “free SMSF” services, according to Mr Colley.
“Although establishing the SMSF may be free, the ongoing costs may be higher than what is available elsewhere in the market. Remember, too, some of these ongoing services may be available on a user pays system.
“The ongoing services may limit the type of investments into which the fund can invest such as a small range of shares, cash and fixed interest. Alternatively, are you signing up for a package, some of which you do not want or will ever use?” he said.
SPAA’s warning came on the same day as super administration provider, CleverSuper, announced their new free SMSF software would be rolled out by July 2014.