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Ben Kingsley Blog post by Ben Kingsley

3 questions to ask yourself when setting up an SMSF

So what are the three initial considerations you need to consider when setting up a Self Managed Super Fund or SMSF?

The first consideration is who’s actually making the recommendation to you? Is it your mortgage broker, is it a real estate agent, is it a property spruiker or is it a buyers agent? All these people are legally not allowed to recommend Self Managed Super Fund to you. It is a licensed investment product and as such, the only professional who can recommend the establishment of a SMSF is a licensed financial planner or a licenses tax agent or accountant. Now, there are specialist who also dabbled in this field and they are called SMSF Specialist. So if you want to talk to the elite people, go and talk to an SMSF Specialist and they will guide as to whether it is appropriate in even setting up a SMSF in the first place. Do not take advice from any third party or anyone who has an opinion who is not qualified to give you that advice because often, it is bad advice or it’s advice that is about them trying to sell you something.

The second question is who is ultimately responsible? With a SMSF, you become a trustee of the fund. You are ultimately responsible for the performance, the compliance and anything associated with running that fund. It is a big responsibility so you can outsource the investment recommendations, the investment strategy, you can also get a third party to do your auditing which is compulsory. You can talk to professionals about what you going to do inside the fund but ultimately, the bucks stop with you. So you got to understand that it does take a lot of work and effort to manage the trustee’s responsibility of a SMSF. So understand that before you engage to set one up.

Now, finally, if you are looking to invest in bricks and mortar, the ultimate decision is who is going to make the recommendations around the property? Now, everyone has an opinion on property. It’s the great barbeque conversation so in reality, I would say to you, it should be the smartest person in the room. Someone who has the experience and qualifications around doing property investing everyday all the time. I wouldn’t be relying on my accountant, I wouldn’t be relying on a financial planner who has no formal qualifications in property investment. I wouldn’t rely on a mortgage broker and I wouldn’t even technically be relying on someone on the fringes, a family friend and so forth. Ultimately, I would be recommending you to talk to someone who is formally qualified as a Qualified Property Investment Advisor or a Buyers Agent who actually has a lot of experience and again, hopefully a qualification when it comes to property investment when it comes to actually making that ultimate purchase.

So there are the three initial considerations that you need to understand before stepping into the SMSF arena. Good luck with your investing.

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