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Investing in property via an SMSF is an “oversold” strategy that could “wipe out” the retirement savings of trustees, according to an industry professional.
The overselling of SMSF properties is not confined to brokers or advisers but is happening “across the board” when a conflict of interest exists, Waterfall Financial Planning director Dacian Moses said.
“I don’t think it’s a case of ‘those nasty brokers are selling loans – they shouldn’t’, or ‘those nasty planners’ or ‘those nasty property spruikers’,” Mr Moses said.
“It’s across the board where that conflict exists: where the person initiating the process is going to make a great deal of money out of that deal going ahead,” he said. “Follow the money – who’s making the money out of this deal?”
The overselling of property investments to SMSF trustees is fundamentally an issue resulting from the lack of regulation for property investment advice, Mr Moses said.
“I constantly get spruiking emails from property stock warehouses that will say, ‘Here are another four properties in Gladstone ready to go with SMSF lends!’ or ‘Here’s a [property] in Northern NSW, just perfect for limited recourse borrowing!’” he said.
“The sales pitch isn’t so much about the properties being great investments for the trustee of an SMSF; the inducement is ‘how can I get some free commissions?’”
Mr Moses fears there will be many SMSF investors who buy overpriced assets but who will then be forced to sell at a loss.
“I think that a lot of people’s financial security in retirement will be adversely affected, if not wiped out,” he said.
“It won’t be the first time and, unfortunately, it won’t be the last.”
