ASIC SMSF fact sheet “misleading”, BGL analysis finds

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Software maker BGL has challenged data in ASIC’s fact sheet sent to new SMSF trustees, finding the annual cost of running an SMSF is much lower.

Last year ASIC announced it would be trailing sending a fact sheet to new SMSF trustees. This fact sheet included a number of warnings, including that “generally, balances under $500K have lower returns after expenses and tax”, and “the average cost of running an SMSF is $13,900 a year”.

Almost immediately the fact sheet came under criticism from the SMSF sector, with the SMSF Association saying it lacked “balance”. Liberal MP Tim Wilson wrote to the ATO Commissioner asking for clarification on the figure.

BGL, which has SMSF software amongst its products, says the data in the ASIC fact sheet is “misleading and not reflective of industry norms”.

Several of the facts were referenced, but the costs figure was not. The same figure appears in a set of ATO statistics, though the ATO discloses that it includes a number of items – such as interest expense and insurance premiums. These items are expenses, but would not ordinarily be counted as the cost of running a super fund.

Analysis by BGL has now shown that these ‘other amounts’ only apply to a “very small number of SMSFs”.

“These amounts contribute to 91.3% of the SMSF costs. The average administration cost, after the removal of all these items, becomes $1,205 – just 8.7% of the ASIC amount. Even if Investment Expense are included, the average amount becomes $3,348. This is a far cry from ASIC’s headline amount of $13,886.”

Ron Lesh, BGL’s Managing Director, said: “We are not disputing the data itself. We just think the way the data had been presented is misleading.”

“BGL has also done an extensive analysis of the 190,000 + funds on the Simple Fund 360 platform. We have done this calculation exactly the same way ASIC did their calculations. Our calculation shows an average cost of $5,720 (compared to ASIC’s $13,886) and when you take the median cost rather than an average cost of running and SMSF it is $ 3,718,” Lesh said.

Lesh said that BGL has “no problem” with ASIC and the ATO releasing data, a long as it is properly explained and reflects the “real costs in the industry”.

“It would appear whoever wrote the ASIC flyer has an anti SMSF agenda and created the flyer to be misleading – and for new SMSF Trustees – just simply scary. I always thought it was the job of the regulators to provide facts not opinions or to follow agendas…”

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