More and more Australians are open to buying property with their super. Do you have what it takes to provide borrowers who decide to proceed down the SMSF path with specialised guidance?
While SMSF lending may seem complex at first, it can be easier than a standard residential transaction, according to three non-bank leaders.
Providing SMSF advice requires incorporating qualified investment, accounting, auditing, tax, and legal advice – and for brokers who don’t have these qualifications, they can’t go at it alone.
Read more: A rising tide for SMSFs
“It’s important to note that unless a broker is licensed, they cannot provide financial advice. However, they can guide their client with various questions to be discussed with their financial planner,” said Per Amundsen, company secretary at Thinktank.
SMSFs are highly regulated, and different taxation positions are in play, depending on the status of the fund, its beneficiaries, and the acquisition or sale of assets at different points in the SMSF life cycle.
And while SMSFs may seem complex at first, they can be straightforward once the structure is set up correctly. This includes having as much information and insight as possible from trusted sources, including BDMs or relationship managers at non-banks.
“Once you are across this market segment, it can be easier than a standard residential transaction,” said Jake Sanders, head of third-party sales at Firstmac.
Cory Bannister, senior vice president and chief lending officer at La Trobe Financial, said SMSF lending is not as complex as brokers tend to think.
“Any broker who has done a trust loan will find that an SMSF loan is very similar – an LRBA simply involves a trust within a trust,” Bannister said. “If something does come up during the process that the broker is not familiar with, we can help them through it. The most common mistakes we see relate to the timeline of events, which is a critical component to ensure there are no problems down the line.”
One way to build knowledge and confidence as well as stay up to date is to attend education sessions and ask plenty of questions.
“The financial world is not stationary. Keeping up to speed with the latest news and compliance developments throughout the industry is key,” Amundsen said.
As the economy changes gear, savvy brokers should consider adding SMSF to their toolbox to broaden their offerings, and to cater to the increasing number of people who are looking to maximise returns on increasingly squeezed assets.
“Some people can only invest this way, and others may see this as a better alternative to their current superannuation fund,” Sanders said. “SMSF lending is an area you can diversify into in order to be a more holistic service provider to your clients and help protect your portfolio.”
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