Having control of your super is one of the enduring attractions for most folks considering the move to a self-managed super fund. However, few people realise the level of knowledge required to set up, manage, and administer an SMSF, and that’s before you turn your hand to the investing side of the equation.

Let’s dive in and take a look at some of the risks of setting up a self-managed super fund on your own.

No Access to Qualified Legal or Investment Advice

Moving from a traditional managed retail or industry super fund, it’s not easy wrapping your head around the seemingly endless finance and investment options and superannuation laws. Financial decisions carry an element of risk, and without a deep understanding of investment best practices, legal obligations, and exposure to risk, it’s easy to make mistakes that can have life-altering consequences.

The role of a qualified financial advisor in establishing an SMSF is to guide you through the maze of regulations, reporting requirements, and investment options available to SMSFs. To ensure your fund complies with super and taxation laws, and that your super is invested in a balanced portfolio of assets providing maximum returns while protecting the initial capital.

Increased ATO Penalties for Reporting Breaches

In its introduction to self-managed super funds, the ATO recommends anyone seeking to set up an SMSF consult with “a qualified, licensed professional” to determine if it’s the right financial decision and determine the structure and set up of the fund.

Each breach of the ATO’s Superannuation Administrative Act code of conduct is assigned an administrative penalty of between 5 and 60 units, with each penalty unit worth $210 payable directly by the trustee if there is a breach. At $210 each, a 5 unit penalty will set you back $1,050, while a 60 unit penalty will cost a massive $12,600! Those are stiff penalties to pay for lack of knowledge, and one of the reasons the ATO recommends anyone considering an SMSF to consult a registered financial advisor.

Don’t Risk Your Financial Future for a Few Dollars

While the initial cost to engage a licensed SMSF professional can be daunting, it is money well spent. You can rest assured that your SMSF will be set up to comply with all superannuation and taxation laws, and the investment advice you receive will help create long-term wealth, securing your financial future well into retirement and beyond.

Need help setting up your SMSF? Get in touch with the team at Parcon Group and discover how we can set you on the path to financial freedom.