Coronavirus, rate cuts and ATO guide highlight need for SMSF advice

The economic and market fallout from coronavirus, the Reserve Bank of Australia (RBA) rate cut and recent Australian Tax Office (ATO) investment strategy guidance sends a ‘stark’ message to self-managed superannuation funds (SMSF) about their need for specialist advice.

John Maroney, SMSF Association chief executive, said trustees who had a strong relationship with their specialist SMSF adviser were positioned to make the correct decisions about their portfolios when markets were turbulent.

“The advice and reassurance that these advisers can offer can prove crucial to trustees when it is so easy to be panicked into making the wrong decisions when markets are falling sharply,” Maroney said.

“This can be particularly so for trustees who are nearing retirement and are having to watch their superannuation nest eggs, which represent years of hard work and savings, suddenly diminish in value.”

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There was a lesson to be learned from the global financial crisis (GFC), as Maroney said the SMSFs that navigated it successfully did so because of the advice they had received post-2008.

“In this environment having a specialist adviser to offer wise counsel on the best course of action can be invaluable,” Maroney said.

The recently-released ATO guidance reminded trustees an SMSF’s investment strategy should be “your plan for making holding and realising assets consistent with your investment objectives and retirement goals”.

“It should set out why and how you’ve chosen to invest your retirement benefits in order to meet these goals. It is not a valid approach to merely specify investment ranges of zero to 100 per cent for each class of investment,” Maroney said.

“It’s an assessment the [SMSF] Association broadly concurs with; specialist advisers can help trustees review their investment strategy and achieve a more balanced portfolio where this is needed.”