Important! – SMSF Trustees Take Note

11th March, 2016

Being a trustee of a SMSF comes with responsibilities, one of which is ensuring that your fund has a relevant and compliant Investment & Investment Strategy.


Benjamin Franklin once said “If you fail to plan, you are planning to fail.” So simple, yet every day we see investors who plan to fail!

Trustees of SMSF’s are mandated by law to plan.

The Superannuation Industry (Supervision) Act 1993 or SIS Act, require trustees to develop, implement and regularly review their Investment Strategy.

Yet we see many funds that have at best outdated or irrelevant strategies and some don’t have one at all.

The SIS Act very clearly sets out that any such strategy must be appropriate for the circumstances of the members and must take into account an appropriate level of risk return, diversification & liquidity. Further, trustees must document how the fund will be able to meet current & future liabilities as well as cater for Life Insurance requirements of members.

The life insurance requirement was only added a few years ago, yet still we see funds who have not updated their strategy in response to this. Many trustees incorrectly think they don’t want or need insurance so they don’t have to include it.

NOT SO! It is a requirement that the trustee “Consider” and “Document” how they will cater for members wanting to hold personal life insurances.

There’s no standard format that an Investment Strategy should take, but it definitely needs to address the circumstances of the members, the objective of the fund and its asset allocation. An investment strategy should also make mention of any other specific rules that the trustee wants to implement like for example a minimum cash holdings, single asset exposure or if Non-Recourse borrowing are to be implemented.

It all sounds quite complex doesn’t it? But it doesn’t have to be. Simply review your Insurance and Investment Strategy ensuring that they are both relevant and current, then just ensure that you invest in accordance with this defined strategy.

In fact why don’t you do it now! If you’re a trustee it’s a requirement you regularly review it, so I challenge you to do it now and then place it in your compliance folder.

Remember having an up-to-date Insurance and Investment Strategy is an obligation of running a compliant SMSF and something that is required to be viewed by your auditor.

If you would like some help or a template make this job easier then please done hesitate in contacting us by CLICKING HERE.

Alternatively we would be more than happy to review your stated strategy.

Let’s get started

If you want to avoid the mistakes of not understanding the dangers of investing without an understanding of the Economic Cycle, then why not have a chat to us about how we can help?

You have nothing to lose except a few minutes of your time and everything to gain.

So… let’s get started.

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