The banking Royal Commission has heard how advice to rollover superannuation to an SMSF would have cost a client around half a million dollars if they hadn’t noticed the issue themselves.
The Royal Commission heard how a customer sought financial advice, particularly around then-upcoming superannuation changes.
The client told the financial adviser that they were not interested in setting up an SMSF, but the adviser “persisted in promoting a self-managed superannuation fund”, the Commission was told.
Eventually the client said that an SMSF could be put in the advice and it would be considered.
The “principal” recommendation of the Statement of Advice – which the adviser said was a draft – was to establish an SMSF and rolling over superannuation from the SASS super fund. Withdrawing from the SASS deferred super scheme before age 58 would have meant the client forfeited their deferred lump sum benefit, which was approximately $500,000. The adviser was seemingly unaware this was the case.
The client said the advice was “risible” and nearly threw it in the bin.
The Commission also heard how support staff of the adviser on several occasions called the super fund of the client, and purported to be the client to obtain information. In these calls the support staff was told about the forfeiture of the deferred lump sum.
The adviser refunded the fees for the advice and suggested following the strategy in the SoA once the client reached age 58. The adviser was asked by the client if they should simply give all her money to the financial planning firm to managed the adviser apparently said “yes”, which the client said was “disarming” and left her “gobsmaked”.