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What are my responsibilities as a trustee?


An interview with SMSF trustee P. Reed

 

There are particular and onerous requirements self-managed super fund trustees (SMSF) must follow to ensure they are running the fund in compliance with all the relevant laws. So it’s essential for the trustees to fully understand these requirements at all times.

SMSF trustee P. Reed says overall, the most important role of SMSF trustees is to understand their duties and responsibilities.

“At a lower and operational level, a key requirement is to have an investment strategy in place which is regularly reviewed and is in accordance with the SMSF trust deed. We review and modify our strategy annually, or more frequently, in line with economic conditions to ensure our SMSF investments are working for us,” Reed says.

He notes his responsibilities as trustee have remained virtually unchanged since he and his wife established their SMSF in 2007. “The ATO web site makes these responsibilities clear. We have a tax accountant who is also helpful.”

Reed says by far the most demanding aspect of running the SMSF is record keeping and management to meet the required retention time for records.

“We established a hard copy record keeping system when our SMSF was first started but this has become onerous, particularly when investments are divested and new ones are purchased. We are currently moving to an electronic system to better manage our records” says Reed.

“Although we have a financial adviser to assist us, we constantly monitor our SMSF investments for the protection of our SMSF and to ensure our strategy is appropriate. This is time consuming and necessary in today's economic climate, but can also be enjoyable,” he adds.

There are several pieces of advice Reed can share with other SMSF trustees.

“Foremost, ensure you manage your fund – always remember it's your SMSF and you are responsible for its performance and whether it prospers, both during the accumulation and the pension phase and, ultimately, whether you have sufficient money available to you in retirement. Your role in many respects is really little different to fund managers for large institutional organisations,” he says.

Reed also stressed the importance of a financial adviser and an accountant to help in running your fund.

“Although there are costs involved with this assistance, their input into the management of your SMSF can be invaluable and indeed essential when preparing the annual SMSF tax return and financial statements. If you are financially savvy, we would recommend that you always research and review recommendations made by your financial adviser and don't always accept the advice provided. If you feel uncomfortable with an investment your adviser has suggested, go on your gut feel and don't accept it.”

He says it’s essential to review the performance of your adviser and if you are unhappy with their performance, change adviser.

“We have done this,” he says. “When we established our SMSF during the early part of the GFC we believed a far more circumspect approach by our adviser at the time was warranted with equity investment, given the global circumstances prevailing then. Several investments were also allowed to reduce to a fraction of their original value before we took the decision to sell them. It was a sobering lesson and also contributed to our decision to change adviser.”

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