The inquiry’s interim report surprised industry observers. Photo: Christopher PearceGreg Angelo is not a man who is big on risk.
Angelo is 67, a former accountant now studying to be an auditor. His wife is also 67, and still works a couple of days at a nearby school. They manage a small publishing business. Angelo is the new breed of retiree – one who retires but continues to work. He took a keen interest in the Murray inquiry.
The inquiry’s interim report surprised industry observers by focusing heavily on SMSF regulation, the final report has done the opposite and surprised observers by barely touching on the sector at all.
The remaining headline recommendation is for a blanket ban on leveraging within super, which Murray found to be unjustifiably risky.
Angelo, as you’d expect, agrees.
He shifted to an SMSF largely to avoid having to deal with financial advisers. He manages his fund using cheap online software, and does not have to deal with the “sharks” trying to hustle him into bad investments.
But there are plenty of SMSF holders less sophisticated than him, he worries.
“There’s a prudential issue with people who don’t necessary fully understand risk being dragged into property investment schemes through the back door.”
He is not a man who takes risks, least of all in these uncertain modern times. His self-managed super fund is narrowly invested – almost all in cash, with a small holding in gold as a hedge. Because these days you never know what could happen.
“We’re buying flexibility and sacrificing yield, because I don’t trust politicians, I don’t trust international money markets, and I want, in fairly uncertain times, to maintain flexibility,” he says.
Over in Kew, Andrew Cullinan somehow finds himself in the office on a Sunday, tidying papers. He’s had time to glance at Murray’s recommendations too, and is not so impressed.
Cullinan is a director at accountants Leebridge Group, and advises about 180 clients with SMSFs – as well as finding time to sit on the board of the Self-managed Independent Superannuation Funds Association.
Leverage and its inherent risk is a normal, effective part of the wider economy, he says. Its not reasonable to exclude SMSFs from exploring the option as part of a sensible investment strategy.
“The inquiry almost comes from a position of worst-case scenario. It’s probably not a practical, realistic position.”
Cullinan’s own SMSF is significantly leveraged, allowing him to spread more heavily into equities than he otherwise could have. He’s comfortable with the risk he has taken weighted against the potential rewards.
“I’ve got a higher investment pool for growth than what I otherwise would have.”