Login
ISCOVER
Brokers have been wedged into a dangerous position, and could be the scapegoat when market hype over self-managed super funds dies down.
According to partner at Owen Hodge Lawyers and consultant at OH Mortgage Solutions Rolf Howard, when the SMSF ‘flavour of the month’ turns sour it will be mortgage specialists who cop the blame.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
With consumers demanding ‘one-stop finance shops’, many brokers are trying to become financial planners, he said
“Financial planners required the same qualifications as mortgage brokers about 15 to 20 years ago,” Mr Howard said. “While planners have increased the entry-level qualifications, brokers have remained at the bottom of the market.”
Certified financial planners need to be a member of the Financial Planning Association of Australia (FPA) – and from 1 July 2013, planners need to have a degree qualification to be a member of the FPA.
“The accreditation needed for brokers isn’t particularly onerous in comparison,” Mr Howard said, claiming that this will be the downfall of the specialised broker.
“Over the next five to 10 years it will be in the self-managed super fund area where something goes wrong because people will extend themselves too far, interest rates will go up and there will be a downturn in the market at some point.
“People in their super funds will lose their assets and when that happens, the media will be baying for blood on behalf of all the superfunds that have suffered.
“Because mortgage brokers are involved, and because they’re at the bottom of the qualifications pile, they’re the ones who will cop the wrap.”
Ben Kingsley, CEO of Empower Wealth and chairman of the Property Investment Professionals of Australia (PIPA) said while there was certainly a risk, he wasn’t particularly alarmed.
“There is no doubt there are some companies that are seeing this as a growth area and are not delivering the due diligence as to the appropriateness of the product for their clients,” Mr Kingsley said.
“That’s why ASIC have been working the media to try to warn people about the promotion of SMSFs in the unregulated property space. Some consumers see this is a get-rich-quick method, but it’s not – there’s an absolute science to it.”
While the media spectacle has caused increased demand for self-managed super funds, Mr Kingsley believes that if consumers become more financially aware, then it’s a good thing.
“We need to keep in mind that it’s really the flavour of the month, but if it means they’re asking questions and exploring options, then I think that’s a good thing, as long as our regulators remain vigilant,” he said.
