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SMSF Series #5 – Tim Miller – Transcript

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SMSF Series

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SUMMARY KEYWORDS

smsf, superannuation, fund, super, people, trustees, sorts, regulator, contribution, ultimately, benefit, industry, managed, point, rules, advisors, bit, self managed super, elements, area

SPEAKERS

Tim Miller, Fraser Jack

 

Fraser Jack 

Welcome to the x y advisor podcast, a global community of financial advisors sharing and learning with one another to drive the positive evolution of financial advice. To get involved, go to x y advisor.com. Or simply download the x y advisor. This series is brought to you by super galleon, a specialists self managed super fund administrator, known for their client centric approach to their full service solution. If you need SMSF support or CPD, check out the Knowledge Center or sign up for Super Guardian updates at Super guardian.com.au Welcome back to the Expert Advisor podcast. I’m Fraser Jack and today we are rounding out our self managed Superfund series and I’m joined by Tim Miller, the head of education from Super Guardian get it in, you know, Fraser, how are you going? Very, very well. Thank you. Thank you for asking. It’s, it’s a beautiful morning, so I can’t complain. Tell us. Tell us about civic guardian. Just so we might start there. I think just what do you do?

 

Tim Miller 

So So my role as a guardian is head of head of education. So you know, it’s a fairly fairly broad role. I was I was brought into the business to I guess, expand the services that we offer. We’ve been providing self managed Superfund administration for for over 18 years. And, you know, so sizable administration business and, and my role was really to provide that additional service, the the operation of providing education for not only our advisor network, but also our trustee network, and internally as well. So, so yeah, it’s really a broad role, where we’re on there to play the middle person between the regulators and the law and, and the outside world, and how that all sets strategically and in elements of education.

 

Fraser Jack 

Fantastic. And more importantly, you get to talk to people all day.

 

Tim Miller 

I do. I do. And, you know, most, most people in my life would tell me that I’m, I’m not shy and having a word or two to say,

 

Fraser Jack 

Oh, you sound like just like all the advisors listening. Excellent. Except, except you don’t have to do statements of advice, right? When we provide some information, so lucky. So tell us your story. Where did Where did this all begin for you?

 

Tim Miller 

Yeah, look, it’s it’s an interesting story. And, well, I mean, we’re talking superannuation and using the word interesting in the same sense, but it’s interesting. But look, what my story started, I, I, I’m always hesitant to, to go too far back. But, but that’s more than the dark cloak of, of mystery. But I did start out as a, as a youth trainee in the in the Australian Taxation Office. And, you know, the whole the whole thing about working in the ATL was that I wanted to do everything except tax when I when I worked in there. And so in about 1994, just shortly after, super guarantee was introduced in the 9293 year, the AGI went went on this sort of expansive introduction of the superannuation business line and a jump jumped sort of both feet in thinking well supers not taxed at something a little bit new. And so I spent, you know, four hours a day every day for for four years on the phone talking to people about their employer and employee obligations and everything super. And and then, you know, the opportunity arose through through a colleague of mine to to get into the space of what was back in the time a thing called excluded superannuation funds and and so I thought, well, this sounds interesting. So I made my way into the private sector and jumped on board into excluded funds and then started the journey pretty much that year with what became self managed super funds. So really got the opportunity to grow with this industry and and provide support to advisors and trustees in that space basically, since day one.

 

Fraser Jack 

Fantastic and you’ve been very lucky in the fact that nothing’s changed since then.

 

Tim Miller 

No, no, it’s been pretty smooth ride you know, two and a half 3% Super guarantee and you know, one set of rules about benefit payments and contribution so it’s been a pretty crazy 20 odd years.

 

Fraser Jack 

Oh my goodness, it hasn’t been a roller coaster. So tell us about that journey. So as as you’ve come through obviously, you know, a big part of your job is not just teaching it’s it’s learning along the way and working stuff out and you know, working out every time the legislation changes and what does that actually mean for everybody and how’s it gonna work?

 

Tim Miller 

Yeah, and look, and I think that’s always been the interesting thing and probably the the one lesson or not the one that It’s an alert for from being part of the tax office. But But being being in there and being at the coalface every day of the questions that are being asked, it’s more about interpret, I think the first thing has always been about interpreting the question. So before you can interpret the law, you’ve got to be able to interpret the question because people have this uncanny knack of asking questions to get the answer that they want to, to get. And so that one of my, one of my great lessons on the super helpline back in the day was people would ring up, and they’d want you to say yes to whatever you they’re asking you. And when you said no, though, they’re quite disappointed. And so they generally would ring back a couple of minutes later hoping to get somebody else. And so you’d have to tell them that you’re on a four hour shift. And, and so it was it was probably worthwhile, then going away and doing something else. So, so so the whole, the whole purpose of interpreting the law sort of starts at that question point. And then and then really, I guess, delving deep into things like, the exciting parts, explanatory memorandums, and, and, and other sort of documentation, policy documents that that lead up to it. And so for me, that was the the first process and then, you know, finding peers and others within the industry who you can have, you know, good, frank discussions with about about matters and, and not afraid, not be afraid to be wrong in your interpretation of stuff to to be able to, to get a good grounding, to be able to at least have conversations with people. And and also then importantly, sort of tell people that they can and can’t do certain things. So so that the learning part, as an educator, the learning part is, is ongoing, and I’m still learning to this day. You know, as as we’ll talk about no doubt with all the reform stuff with with superannuation, it’s really just a matter of taking on board, certainly, what does the government release first, then what’s other people’s opinions? And how do those two things match up? And then ultimately, what does the regulator say? Because, because they’re the the final set of eyes that have to be cast over things. And so you want to at least, as much as possible, agree with agree with the regulator?

 

Fraser Jack 

Yes, it’s certainly interesting, isn’t it? Well, now, as you say that and I’m thinking to myself, you know, that the Lord’s black and white, it’s written down as there’s some explanations there. Surely there could be no debate over this. But you’re you’re absolutely right. When it comes to a lot of these issues, it’s about understanding and having those open debates with with colleagues and other people around you to make sure that everybody’s on the same page.

 

Tim Miller 

Yeah. And look, it’s it’s interesting, and I know in the series, you had some some discussions with, with ASF audits. And and my relationship with with ICF audits goes back 20 years. And, and I can certainly say that most of those conversations in the early days, were not just about an administrator in order agreeing with things on things because largely, we disagreed on pretty much everything, which is the the purpose in many respects of, of the auditor. And my original go to argument was always it’s not what the law says it’s what the law doesn’t say. And I think particularly with with the legislation, is legislation will often tell you what you’re prohibited from doing or that they’ll set the parameters around, what, what, what applies, but then everything in between section one and section 300, or whatever, sort of provides some form of scope to be different. And And so yeah, so gray is obviously the favorite color of, of all SMSF educators, because that’s the ultimate world that we live in.

 

Fraser Jack 

It’s really interesting part of the of any legislation that comes in, isn’t it that the fact that they often the guidance is, you know, don’t do this and don’t do that? No, here is it here is best practice, go and do that. And then,

 

Tim Miller 

yeah, and look at and I think that’s the, that’s the key, the classic one, I think in the in the SMSF space is, you know, the contribution rules that they’re the same for, for whether you’re in you contribute to an industry fund or retail fund, self management fund, all those sorts of things are the same, you know, the investment rules are really where the the SMSF space comes into its own. And that’s where, you know, there’s the guidelines, you’ve got to have an investment strategy, but it doesn’t tell you what you’re going to have in that investment strategy. And, and the ATR is position has has always been and hasn’t changed in this space that it’s it’s your fund. And so as trustees, you ultimately controller subject to sole purpose test and other sorts of key issues. So there’s a huge amount of, you know, room to maneuver within the, you know, you’ve got to have a strategy to provide for your retirement, but we’re not Gonna tell you what that strategy is, you have to work it out for yourself. But here’s some guidelines about what you definitely can’t do. And so everything else beyond that is either black and white, like listed securities and a few things like that, or, you know, slightly questionable, when you start to talk about what is business real property, you know, what are the rules around limited recourse borrowing arrangements? How can you invest in related entities and all those sorts of other things, you know, and who is a related entity, all these areas, you know, they take you down a path, like a, you know, the, the classic rabbit hole, and you don’t know where you going to come out

 

Fraser Jack 

yet. Now, obviously, having working in a regulator has its benefits. You know, when you look back and understanding how regulators work from the inside out, not just from the outside in, I think we were often guilty of just looking at regulators from the outside as a, as a big logo, or or, you know, the A to A to be logo or asik is a big logo, and not really thinking about what happens on the inside. Yeah. Does that help with you with your career?

 

Tim Miller 

Well, look, I mean, I had to be fair, in some of my presentations that I that I do, I may I may go a little harsh on on the tax office from a regulatory point of view. And that’s, that’s often comes back to say, their interpretation versus mine and others within the industry. And, and, and that’s the beauty of interpretation is that not everybody’s is the same, but one of the one of my messages that has been really clear for many years is that we’re very quick to, to highlight the deficiencies in the ATR reporting of certain information. But very, very casually ignore the fact that often it’s us doing the reporting. And so, it’s, it’s an element of what I would suspect and what often called garbage out. And so, you know, if your reporting processes and means are not up to scratch, then the information on the other end is generally going to be, you know, also not up to scratch. Now, you know, along the journey, there’s no doubt that the regulator has had some some relatively terrible systems. So so so certainly elements don’t report that well, but, you know, I think like the rest of us, they’ve evolved in that space. And, and, and we can all be quite critical of other things like my gov and, and other systems that the ATR, particularly us. But, you know, as they have evolved, the capacity for us to report on total superannuation balance, and all those sorts of elements, it may not still be in our, you know, ideal world, but it certainly leaps and bounds on having to write to the regulator and get a list of stuff reported out to you, and it would take x number of months and things to do, you know, just the timing of those sorts of things improved in time. So yeah, so so I still apply the garbage in garbage out sort of process in that, whatever, where whatever we’re reporting, and if we’re not reporting correctly to the regulator, then we can’t expect them to report correctly back to us, albeit that there are areas they can live their game in.

 

Fraser Jack 

Yep. Now, obviously, the technology in the software is one thing, and if the systems don’t allow, and then they don’t allow it, and, you know, we need to wait till systems catch up, because often that can be a long wait, but they’re also just human beings, right? Inside these, these inside these, you know, organizations. And it’s, you know, in a difficult situation, and, and as you would imagine, we’re spending four hours on the phone, talking to somebody, you know, as a regulator, if they’re going to be starting to abuse you, then they, you know, exactly go enjoy the conversation, I want to give them some lenient.

 

Tim Miller 

Now, that’s right. And, look, I liken it a little bit, you know, I’m a dad, and I’ve been a coach of my son’s sporting teams. And, and, and I liken it to, you know, empires of junior football, when, and even sports for adults or whatever, where, you know, ultimately, whenever the umpire makes a decision, 50% of people disagree. And that’s because the decisions gone gone against them. So if you apply that in the SMSF space, or the Oto, are ultimately the umpire, and, and they’re the umpire between Treasury and and the the end user being there, the the SMSF trustees in this instance, but advisors and accountants and that as well. And so you’ve got a piece of law written by policymakers, with with and when I say pays a lot, lots of lots of pieces of law, that are occasionally changing, written by policymakers, who then can can walk the hands of it, they’ve done their job, you’ve then got the the end users that are trying to interpret that law and then trying to apply it to their own set of circumstances. And then you have this group in the middle who ultimately have to make an assessment of whatever decisions you make as the end user to make sure they are in line with the intention of that that piece of law and so There is always going to be disagreement, there’s always going to be problems in that place. But yeah, it’s the concept that, absolutely, they’re all they’re all human. You know, I’ve even met a few of them. So I can, I can personally, personally attest to that. And, and they’re just trying to do their job, ultimately with almost the same amount of information that you have with regards to interpreting that, that information, perhaps with, with with higher capacity to, to engage the legal fraternity from from the commissioners point of view, but but that’s possibly the where it ends as far as additional powers.

 

Fraser Jack  

Yeah, I think there’s probably a really good analogy just to treat the the regulators or the referee on on the field, and, and you got to treat them, treat them as as human beings and with respect, and obviously, when it comes to the policymakers, you know, their job is to write policy that favors more people than not favors people and keep it, you know, keep it reasonably fair, because for all the different systems, as you said, you know, the government has to collect tax, yeah, to run the country. If it doesn’t, then guess what, we don’t run the country. So that’s great. So yeah, I guess it’s a it’s a, it’s about making sure that more people, obviously there’s going to be losers, every single piece of legislation, there’s winners and losers, and the idea is just have more winners and losers, right.

 

Tim Miller 

Yeah, correct. Great. And, you know, and that is the, you know, that is the the the superannuation conundrum isn’t it is, is probably, I think it’s come up recently with some of the the legislation that was that was enacted, sort of just prior to, to the end of June, which was in regards to contribution changes, but also the definition of a self managed superannuation fund, we might talk about that stuff a little bit later. But But you know, when you read through the conversation that’s going on inside parliament, when they’re talking about these sorts of things, that it is very much that there are winners and losers, and it is very much about why this does benefit this this core group of people. And and it’s, it’s, it’s ultimately not unnecessarily anti these other ones, but they’re not going to benefit from it. And so it’s finding the balance, and one of the things that was was raised, and, you know, I probably won’t get too much coverage, I wouldn’t suspect in the, in the broader sort of sense of the industry, but one of the one of the pieces of legislation that went through and they’re talking about the whole your future, your super stuff, and they’re talking about the definition of self managed super, and the changes to the to the bring forward rules and other contribution rules. Because I said, if we want to pass this legislation, shall we actually go back to the concept that we don’t have an objective of superannuation or an objective for superannuation? We tried and failed to introduce a one liner of what is the objective of super, it was it was proposed as an amendment and was scrapped pretty much straight away. So, you know, really difficult to, to a guess, continue to pursue the purpose of super if you don’t have an objective? For

 

Fraser Jack 

me, that’s kind of like the North Star, isn’t it? Yeah. Purpose. Yeah, absolutely. We’re going to need to start with a purpose. We’ve talked about it all the time. Yeah. So tell us about what your passion why why self managed Superfund?

 

Tim Miller 

Look, I think, ultimately, my passions driven by and I did a presentation once for a group of a group of self managed super fund trustees and the advice group that that got me up to present said, Tim, give us give us your bio. And, and I, again, I wrote something down for them. And one of the sentences that was stuck with me, one of my sentences was, you know, Tim enjoys nothing more than then educating self managed super fund trustees and, and the director of this business has got up and said, like, we’re really happy to have him here. We’d have a sad indictment of his life that he loves nothing more than educating self managed Superfund trustees. But, but I think that for me was, you know, it was a it was certainly a moment where I changed my bio shortly after that, but but I think the the message was, was was clear that point in time, but whilst we talked about the tax office, being a regulator with regards to the the interpretation of the law, you know, I really my passions, it stems from making sure that those people that are ultimately engaged in this industry, which is the trustees of self managed superannuation funds, the mums and dads that they that they have that not necessarily the voice, but they they at least have have people that can help them interpret what potential their advisors, their accountants, and that are talking about in this regard, but also ensuring that and I’ve done a lot of accreditation courses under the old sort of prior to fasciae and that the old rG 146 requirements I used to do courses on a effectively a monthly basis for advisors wanting that qualification and so my passions always really been about, you know, if you want to be in this space, it is a specialist area as a broader part of the superannuation industry, you know, you really need to have the knowledge to be able to talk to trustees. And then your trustees need to have a broad sense of knowledge one, because they’re signing a declaration that says they have that knowledge. But, but to because you want them to understand the strategies that you’re actually explaining to them. So they can determine whether it does benefit them or not. So, so I sort of see myself as, as having this, this this singular objective of making sure that everybody is entitled to and gets the same level of education that is available for the richest SMSF well, then the poor superannuation members deserve that same same amount of information.

 

Fraser Jack 

Well, fantastic. What I heard you say then was that you just love helping people. And because you know so much about this stuff? It’s, it’s an easy way for you to help them. Yeah, that would probably be a pretty good summary. Fantastic, so tell us about your job, then what’s your day to day job involve?

 

Tim Miller 

So, so my day to day job is ultimately about a guess, gathering information. So for example, over over the last six months, we’ve had two federal budgets, or just over six months, where two federal budgets, you know, we’re four years into super reform that seems to be never ending. And it’s and so my day to day job is about interpreting what we were currently known. So you know, we so regarding we have a significant client base, and they have questions and they want to know whether or not they can undertake certain transactions. Now, we don’t advise on, on, on what a fun should or shouldn’t do, we provide support on from a compliance point of view what what is and isn’t possible, and then they need to go and seek that, that advice piece. So. So on a day to day basis, I’ve got the daily administrative compliance, issues to consider and conversations often involving auditors and other parties, then there is a large part of my my time spent on researching my next subject of choice. So you know, I run as a minimum, I run monthly webinars, but I’m also writing regular content for for articles. So I do monthly, monthly articles for a number of advice groups out there, I write articles for for trade magazines, and I also do technical updates for our client base as well. So it’s about it’s about trying to gather information, it’s about trying to determine what’s topical. So it’s about researching those elements, and also taking some risks and not just, you know, writing about the what the new rules are, it’s about potentially giving a little bit of an opinion about whether those rules are right or wrong in different what might, might might be. So a lot of research a lot of conversations with with others, I spend a reasonable amount of time talking to my peers, within the industry, just to get get their a position on on certain issues as well. Because, you know, none of us the, the super Oracle as such, and so we will have different opinions. And then yeah, then ultimately, it’s about putting all that research into a presentation into a paper into a bulletin or an article. And making sure you’re getting the right message across. So that’s a day in the life.

 

Fraser Jack 

Fantastic. So I see then that self managed super funds, kind of a team sport, and you then become the coach or the captain of that team. Because obviously you would, like you said, you’re dealing with, you know, clients, you’re dealing with administrators, you’re dealing with that auditor is dealing with advisors, accountants and all different aspects.

 

Tim Miller 

Yeah, yeah, absolutely. And, you know, if, if, if the analogy, if our sporting analogy is that I’m the head coach, then then you know, it’s about having the right level of assistant assistance around you, you know, you need the defensive coach and the attacking coach and that as well and, and, and others that can can help sort of, you know, in many respects, rein me in, because given given the microphone and a stage, once you put me there, then then it’s it’s hard to stop me. But, but in the in the build up to all of that, you know, we can talk about the parameters around, you know, what message we’re trying to get across. And so, you know, always having to work,

 

Fraser Jack 

so used to having four hour conversation script. And so, let’s, let’s look at that. Then if it is a team of people, we call it self managed, which kind of indicates that it’s, you know, a small, small thing isn’t one person or a couple of directors managing this fund, but, you know, maybe the, maybe the term self managed Superfund is something that might need to be cleaned. Uh,

 

Tim Miller 

yeah, well, I don’t think they’ve ever got the term right. Because it, it’s, you know, when we started out in this industry and they called it Do It Yourself super. And nobody did it themselves and anyone that tried to do it themselves generally, I wouldn’t want to cast aspersions. But most people didn’t do it. Right. And and, and that that’s in the sense that you’ve got lodgement obligations, you’ve got other other sorts of areas. And, and so I think the best way I like to define self managed is that, that you, as trustees, you’re the manager of a broader team of people that is, is, is looking after your fund. And so it’s bringing that concept back and probably the most loosely used term of what is the, what is the number one benefit of having a self managed superannuation fund? If you ask that question over the last 20 years, the answer will always come back with control. And, and but the the anomaly is that you don’t have control unnecessarily because you are engaging with potentially a financial advisor, with an auditor with potentially an actuary, with investment managers, so, so you you are managing that, that group of professionals to help you achieve your objectives. And often those those groups are involved in determining what those objectives are, as well. And so the concept of control is a really strong one in that, in that the real benefit of controlling the fund is that you have the ultimate say, in what you’re doing. So from a from a timing point of view, you know, you can control when you buy and sell investments. So, so therefore, you can control when you can control ultimately, to a degree to a certain degree when you load your your funds. So if you if you operate through a fund administrator like ourselves, then they obviously have their own lodgement programs. But ultimately, you know, the provision of information, the way that data flows through to the administrators will will help in the timing of those those issues. So control is a loose concept. But ultimately, it’s a management concept. And that’s the link to, to self manage. But yeah, finding the appropriate name is is a difficult one.

 

Fraser Jack 

Yeah, has it been anything else put forward?

 

Tim Miller 

Look, it’s not officially, it’s the I always see all of these other sorts of names out there of people promoting, you know, the new style superannuation fund, which are just, you know, just sort of fancy names for self managed funds. But, you know, whether you talk about the, like the family fund, and all those sorts of things, but that concept can’t be correct, because there can be people that are other other than the family members inside of the fund. So, you know, it’s, I think, ultimately, the legislation’s got it right. When they talk about funds with fewer, then of course, we’re now talking about funds with fewer than seven members or funds with up to six members. But when I talk about a small superannuation fund, that obviously pretty much defines what it is, it’s a small fund, it’s a fund with less than a certain number of members. But it’s probably more a self directed superannuation fund than a self managed superannuation fund. But I think self managed sounds a little bit more exciting.

 

Fraser Jack 

A it’s in the name, but it’s sort of one of those things, isn’t it? changing the name doesn’t actually change most of the outcomes? Not that. But you mentioned control that a lot of people feel that it’s control is the thing, but it’s a quite a loose term. In your opinion, what’s the big benefit, then? That’s a big benefit of of self managed super, yeah, over normal? Well,

 

Tim Miller 

I think the the big benefit is, I guess, trying to try to put that into term. broadness of choice, I think, is probably more the benefit of it. So, so choice is also as as broad a word as control. But, but you’ve got investment choice. So, you know, arguably, you can say, well, with with the other funds within the within the sector, you’ve also got choice of investment strategy, but they have to be a little bit more streamlined with, with what their strategies actually are. And you’ve got professional fund managers sitting in behind them, so they’re not necessarily going to, to look at such things as you know, crypto currencies, residential property, artwork, you know, the all sorts of the oddity style investments that you might actually see in the SMSF space. And so I think choice is probably the to me the greatest benefit of self managed super given that with choice obviously comes responsibilities and sounds a bit like spider man there with that with that sort of with that sort of statement. But you know that the whole the whole idea that you’re not beholden to one set of rules or one set of an investment vehicle and can broaden your horizons a bit?

 

Fraser Jack 

And probably engagement for would fall into that as well. Yeah, I’m really actively engaged in this sort of versus just, you know, one of those things that Yeah,

 

Tim Miller 

I hate I hate it when someone else comes up with a better answer than me and that what you’re saying, Yeah, but, and the irony is, is that years ago, when I first started doing presentations, around the concept of whether a self managed Superfund is right for, for people, and this was really around that whole simpler super reform, which was never simpler back in 2007. But that sort of concept, were always used to talk about the pros and cons. And I’ve always, always be mindful of making sure that you highlight the cons of self managed over as much as the pros. But, you know, when I was working, working side by side with some colleagues at that point in time, and engagement was actually the word that we said, you know, let’s be a little bit different, let’s say that, that one of the real reasons that people get into self managed Superfund is that it gives them something to do in the in the superannuation space, and it gives them a greater appreciation for what the superannuation system incorporates. And so, yeah, engagement, you know, can I take my answer back and, and say, engagement, but it’s absolutely a critical issue in our space.

 

Fraser Jack 

Yeah, I think, I think when people do that, and they get engaged, it gives them a bit of a status thing as well, you know, and to be able to get into the bathtub or something, and tell their friends about how their, their the investment manager of their fund.

 

Tim Miller 

Yeah, and you’re absolutely spot on. But, and I think then, you know, the, if I just jump back to my concept about the pros and cons, is that engagement, that choice and that control, all those sort of three key words, and they all lead to things like taxation benefits, and other elements where the tax rules aren’t any different for self managed super, but you control when the tax events happen and, and those sorts of elements. But, but the flip side of that is, the responsibility is obviously linked to your capacity to, to undertake and perform certain duties. And, and so, you know, with, with the inevitability that we get older, therefore, you know, how, how much responsibility Do you want, beyond a certain point in time in your life, and, and I actually still think to this day, that it’s the one area that the self managed super industry hasn’t really nailed down. And that is, there’s a lot of conversation always has been a lot of conversation around elder abuse and, and other elements, but also mental health and diminishing health and an invalidity, those sorts of areas that that the SMSF environment doesn’t actually sit well in well within, because you’re often finding you’re moving your trusty powers over to, to someone else. Via and during powers of attorney and, and the law I can and then, you know, then it’s a different mind controlling your funders, not yours. And, you know, and I think that, you know, we have this, this small superannuation fund alternative, which is the small aperture fund. And it’s an area that I have often been passionate about, we used to do some administration of small aperture funds in past life. And it’s an area that I think is underutilized because the regulator treats self managing small app for quite different and that’s because of the Abra concept. And so, you know, I think with all those other pros of self managed super, you know, that end of life, and and that part of the industry still has its difficulties that we have to try and overcome. And that’s where the advice pieces is hugely critical. And when I talk about that is an SMSF. right for you concept, you know, day one, you know, we say not not what’s the name of your self managed Superfund or what are you gonna call it? But have you got an enduring power of attorney and have you got a will in place, because you don’t know what’s happening to win. And you’d need to address these issues. From the very moment you start talking about self managed super,

 

Fraser Jack 

yeah, I couldn’t agree more. There’s definitely a skill in being a trusting, especially for somebody else has an enduring power of attorney or whatever it might be. Yeah, there is definitely a lot of work that goes into that. And you do actually have to think very, very differently as somebody representing somebody else, what you would do yourself, so to be able to remove you remove emotion or remove, you know, remove yourself in that situation and put yourself in a different situation. That is a skill and I think, too often it’s just they put the kids in charge and then that that’s when it can go wrong. Yeah, right. Very good. So tell us about like, before the obviously we’ve just gone through the the new financial year and things that, you know, change for you as every time we go through financial year. What were you hoping with, with people with, you know, post at June, also pre to DJ

 

Tim Miller 

pre surgery. So what what, what we were sort of helping with mainly there in that regard was was this this whole idea because you know, we were caught up a little bit in I said super reform, in theory happened in 2017. But, but it’s been a constant change every year since 2017. And, you know, the one thing that everyone had been waiting for was indexation. Now, you know, indexation has occurred at one July. So we’ve now got new concessional and non concessional caps, which gives us greater bring forward capacity from an income or non concessional amount, we also want a new transfer balance cap, so we had the the increase from 1.6 to 1.7. But with with that comes this whole concept that, you know, not all things are treated equal. And so not everybody gets a new personal transfer balance cap, not everybody gets a new non concessional contribution caps because they’ve exhausted their capacity to make non concessional contributions. And so it was a little bit about the conversation pre 30 June was a good one for leading people into the future of planning that as well, which is this concept that, that the super environment now is very much a hindsight versus foresight kind of conversation in that contribution strategies are very much driven by hindsight, because everything is based on your total super balance of the previous 30th of June and so, you know, where you sat at the previous 30 June, gave you the capacity to make decisions in the lead up to the to the next 30 June with your ability to make contributions and, and probably nowhere was that more evident than 30, June 2021, where, where ultimately, we saw a situation where 30 during 2020 was coming off the back of of, you know, the initial market crash of COVID-19 and, and so a lot of self managed super fund balances were down with a lot of them hit drop 30% in March 2020 and who knows maybe a slight recovery, but but not significant. But then come 30 during 2021 some of those portfolios had had grown 25 30% you know, some some parts of the market were up 40%. And you know that that’s that’s quite a significant growth, particularly for those sort of higher, higher balance members who at 30, June 2020 might have been thinking, Okay, well, we’ll we’ll be able to make contributions in a couple of years time and we know there’s going to be some indexation, so we’ll wait for then indexation. And then we’ll make our contributions, you know, all of a sudden, they’re sitting sitting at $1.4 million at 2020. And then over 1.7 million at 2021. Because of the growth and they’re out of the game, they’re out of the contribution game. So the way that the thing that I was focusing on a lot before 13th of June was what can you do before you get to this point, and and i think it’s a it’s it’s a message for moving forward is that if we’re saying that every decade, we get a big market event that that creates sort of a lot of losses that we shouldn’t be focusing necessarily on the the downturn in the market, we should be focusing on the opportunities that that creates with lower balances at a point in time. Now, not all those opportunities are great for everybody, particularly if you’ve just retired and you’re looking at an income streams and things so so you’ve got that side of it. But then the foresight part is, is the pension side of things. And that is that, you know, growth, growth is is probably the enemy of pensions, from the point of view is that it requires you to draw higher incomes down when you might not necessarily want to, yes, we’ve got the 50% minimum pension reduction again this year. But you know, we’ve also got a transfer balance cap of, of $1.7 million. And if you’ve got that growth that for those clients that are lucky enough to have more than that, well, then they’ve got to make decisions about money sitting in accumulation versus money sitting in in a pension account. And then what that means from an investment strategy point of view and all those other sorts of things. So, so the focus sort of pre 30 join was how do you deal with the known issues like how do you deal with from an advice piece, dealing with what you know about versus speculating on on what you think might be happening in the future? Because, you know, we’ve had two budgets relatively close together, all that other sorts of things. And, you know, the the the proposals for 30 June 2022? would certainly I have no doubt would have been clouding some people’s sort of minds in the lead up to 30 June 21. Because I got well hang on this is what’s going to happen in a year’s time potentially? Do we wait, you know, do we wait for indexation? Do we do all these sorts of things? Well, I’ve seen so much change in the last four years. And often, you know, you do wait for $30,000 worth of bring forward index to cap and miss out on the opportunity to put in 300,000? Or do you act now and go Yeah, you know, by by acting, now, I might have taken a little here, but I’ve taken a bigger benefit in the long term. And that’s the game we play that strategically, you’re only ever going to be right at the time that you write it, and then it could impact and could be changed. You know, it’s like the the one thing this 2022 stuff, and we might talk about a little bit like the legacy pensions, and and the removal or the amnesty that is proposed to come in, you know, potentially in a year’s time where people will have a two year window to wind up these pensions. Now, it doesn’t impact that many self managed super funds in the grand scheme of things. But you know, I was always at the coalface back in the early 2000s. of setting these sorts of things up. And the people the reason people set these up, were for legitimate reasons based on the law at the time. And now they’ve become the scourge of the industry since 2007. But you can only act on what the law allows you to act on at any given point. And so when we talked before about technology catching up and things like that, you know, it’s the law catching up with with things as well. So the other thing I was grappling with sort of pre 30, June is I’m getting questions almost daily, and about things like cryptocurrency and non fungible tokens. And people say, Tim, what’s your opinion on non fungible tokens? I said, Well, let me Firstly, Google, what non fungible tokens are, and then I’ll give you an opinion about it. And, you know,

 

Fraser Jack 

it’s when people say, oh, what do you think about NF T’s?

 

Tim Miller 

T, Yes, right. Yeah, I know a lot about NF phi. But, but nF nF Ts was it was an interesting one. And, and, you know, and I, I’ve been doing a couple of presentations on this space. And it’s a fascinating area, because, you know, I think blockchain technology gives us one thing, and that sounds like I know what I’m talking about when I can just say what it’s called straightaway. But, but blockchain blockchain gives us this great capacity to track transactions and absolutely identify ownership with with regards to, you know, separation of assets, and, and some of those critical issues for self managed superannuation funds. But given that, then a lot of this stuff was introduced to avoid centralization into it to avoid government regulation, and that, and then to incorporate them from an investment point of view in the most highly regulated environment. You know, it’s, it’s the, it’s the clashing of, of two clans in many respects. And, you know, the the whole NF t stuff, when we’re talking about digital art, you know, you can guarantee that there are self managed super funds already trying to engage in these sorts of investments. And the regulations just don’t exist, we have collectible and personal use asset rules, which talk about storage, which talk about insurance, which talk about displaying and all those sorts of things. Well, how do you how do you regulate USBs and that’s a really, that’s a really sort of archaic way of looking at it, but you know, the, to identify blockchains one thing to then talk about the actual piece that the investment is in, which is, you know, this digital artwork or whatever, and, and I’m not sure if you saw that one recently there was that the Italian artist who sold nothing lucky sold a sculpture of nothing. It was in a 1.5 by 1.5 meter square and somebody paid $23,000 for effectively an invisible sculpture. Now, I mean, I’ve been making invisible sculptures all my life, but but no one’s willing to pay enough to start

 

Fraser Jack 

you have to start marketing them. Exactly. And people do pay for them.

 

Tim Miller 

But But how do you how do we regulate this sort of stuff? Because because what we’re doing is we’re seeing that that movement in our industry from from, you know, the older generation of self managed Superfund members to the new members are invariably younger members, and their, their life skills are driven more by the end Net, buy digital investments in those sorts of sorts of sorts of things. And the regulation often just takes too long regulations take too long to catch up. And therefore, it’s hugely problematic for fund auditors and those sorts of parties and advisors. Anyone that, you know, you can’t advise on this stuff. So, well, that

 

Fraser Jack 

is interesting that financial advisors, in most cases can’t advise on the right. Yeah. And that’s often due to, you know, you know, a PII issue as well, more than anything, a lot, a lot of PR insurers are removing themselves to say you can’t, he can’t mention it, but it is a very interesting thing where, where you do have, you know, trustees that, as you mentioned, have broadness of choice, but yet, you know, those, you know, those new technology type assets that are coming out then that are tradable. purchasable, and, and saleable, you know, you can use real money, you don’t need to use crypto to buy them, you can actually purchase them with real money. And digital art is, you know, one of those very interesting things, which is the NF T’s. Often it’s the sale of a individual piece of digital art, obviously, when we used to the difference between an NF T and normal digital art is I can pretty much share an image on the internet, you can share it, then 1000 other people can share it, and we can all have a copy of this. Whereas this just allows us to say, you know, I’m the actual owner of the art and yes, it belongs to me. But you’re absolutely right. You know, we do have rules around, you know, display. So yeah, it’s a hard one to police. I think more than anything.

 

Tim Miller 

I think so. And I think probably importantly in that is that, you know, the the balancing the ionut piece with? Yeah, but does that satisfy the sole purpose test? Like how is that? How is that providing for your retirement? So that’s a self gratification issue. And I thought one of the one of the great things you said before, when we were talking about the whole injuring powers of attorney and the things was, you know, the taking emotion out of out of the decision making? Well as trustees, we technically have to take emotion out of the the decision making process for creating an investment strategy. And effectively the sole purpose test and previous ruling by the Oto, one that says that the decision ultimately can’t be a motive, you know, you it has to be driven by how does this investment, provide for my retirement? And if in any way, shape or form, the decision is made based on any personal enjoyment that you get out of it, then largely, you’re in breach of the sole purpose test? Yes, there are incidental benefits and those sorts of things. And so, you know, it’s a real, real minefield, with regards to where the regulator will come out with this area, and and deal with it.

 

Fraser Jack 

Yeah, it is. Absolutely. And I think it’s something that they have to address that because it’s definitely a thing, it’s definitely around. And it’s something that they’re going to have to put some put some words to paper around, because otherwise people like you said, if there’s no words on the paper, and then people will start purchasing these items and put her in the fund and then working out later that maybe that might not be a great thing. Yeah, speaking of super reform, and all the information that, you know, has came out over the past four years and happening over the next, you know, five or six years to come, you know, a good decade worth of tinkering around the edges. Tell us what you think might be coming down the track or what you think maybe should coming down the track?

 

Tim Miller 

I think I guess probably where I where I’d start with that is with the the budget announcement stuff, and, and perhaps sort of where I see that, that landing in a post 2022 environment. Because, you know, the The interesting thing about this recent federal budget was it’s it’s kind of the first time that that I’ve seen where the government has said, Here’s these measures, and we assume that they’re going to start from the first of July 2022. That’s effectively what they said. And that’s a reflection of where we’ve been for the last decade, you know, we’ve had, we’ve had 10 years of, I guess, government instability with regards to, you know, who’s leading leading the country at any given point in time. And, and what that’s meant is that legislation has largely taken a lot longer to, to pass through. And, you know, the recently the, the changes to the bring forward provisions was it was a classic example of that, you know, introduced as a, as a federal budget announcement, but then took well and truly in excess of 12 months to, to come into law and things on a measure which in its release was supported by the opposition. So, you know, if measures that are supported by the opposition take in excess of 12 months, and when you’ve got descent, then you know, measures invariably don’t get through or they go through in in significantly changed manner. So, When we start to talk about some of the 2022 proposals around downsizing contributions and, and lowering the age limit there and things like the first time Super Saver scheme and enhancing how much you can you can contribute from a deposit or how much you can withdraw from a deposit point of view. So, the changes of that going from 30,000 to 50,000, you know, it makes me makes me contemplate just how successful those measures will become. If you then reflect on what we’ve just talked about, which is that there’s been so much regulatory change, because, you know, for the first time a Super Saver scheme, for example, is currently $30,000, that you can withdraw plus plus your earnings, and the most you can contribute is 15,000 a year. So you’ve got your caps, but the most that you can attribute to the first time Super Saver is 15,000 a year. So, you know, simple math says, well, that takes you two years to contribute and take money out. But if that limits increasing to 50,000, and you know, everyone knows that a $50,000 deposit on a home is better than a 30,000 deposit up deposit on a home. But if you’re doing that in Super, and you’re still limited to only putting 15,000 in a year, then all of a sudden, a two year strategy becomes a four year strategy if you want to maximize it. And what else changes in that four year period? You know, we’re talking about benefits being preserved in the super environment. And lots of life circumstances can change in a in a four year period. So then if we’re talking about younger generations making contributions to buy a house and putting you into super, and circumstances change, well, then they preserve their benefits until, you know, post age 60. And what’s not to suggest probably to nail down a key concern of mine from your original question is what’s not to suggest in a world where age pension age has increased to 67. And the work test has gone from or not needing to satisfy workers has gone from 65 to 67, and potentially to 74, where you’ve got the ability to contribute, what’s to suggest that our condition of release from a retirement point of view doesn’t move from 65 to 67. So accessibility, so that that’s always in the back of my mind, a problem is accessibility to superannuation benefits. And of course, if we do see that move to 67, particularly, particularly the age pension moving to 67, the fact that preservation ends at 60, in theory, with regards to when you can can actually satisfy the retirement condition of release from age age 60, by making a declaration of have no intention to re enter the workforce, those sorts of things, then we’ve got this seven year window, where people will have accessibility to their superannuation, which to me then exposes the age pension system a lot more because people are potentially drawing down, you know, without necessarily a great appreciation of life expectancy and other sorts of elements. This this window, this window is created where you know, superannuation serve one purpose, we’re all terrible savers. And so we we have super to preserve our benefits, so we don’t spend that money. And most of us look for ways to access that that superannuation money and and so how do we satisfy the definition of retirement? What are what can we do to get access to through this money? So, you know, from a, you take those policy announcements for 2022. And you expand on them to to think of the the extension of that and you go, Okay, well, where’s the change to preservation? Where is the At what point in time? Do we see the removal of tax free tax exempt income over the age of, of 60? When does transition to retirement income streams CS? Or when do they change the age that that comes into to effect? When do we lose the acpi deduction in its entirety? And where do we go from a tax free pension environment to a taxable environment? Because it’s more people in pension in our own accumulation? And so, you know, and this comes back to that one comment we made before there’s no objective of superannuation. And so without that, without that objective, it makes it rife for bad policy decisions. And that’s my fear. Yeah, it

 

Fraser Jack 

certainly doesn’t it depends on who’s running the policies and what their objectives are so you’re absolutely right there’s with no doubt there’s going to be lots of ripples still account a lot of change on the on its way and so I guess for someone like yourself, there’s always gonna be plenty of work to do, that’s for sure.

 

Tim Miller 

Well, this is it. I mean, I talk about a lot of instability, but I also got to say I love a lot of instability because it keeps my mind fresh with regards to you know, that That, that moment of panic where you, you know, you drive home on a federal budget night or whatever, all of a sudden you hear that they’ve changed the entire superannuation system. And so you realize that you’re not going to sleep for the next 24 hours. But, but deep down, you kind of also hope for that. So that, so you’ve got a job to go back to the next day.

 

Fraser Jack 

Fantastic. Now you’re obviously head of education at the beginning, tell us about what else to be Guardian does.

 

Tim Miller 

Yeah. So so the Guardian, primarily is a self management fund administrator. So so we provide the the administration service for for smsfs, we have effectively, I wouldn’t say two offerings necessarily, because admin is admin. But we do service clients directly. But but largely, our referral source is SMSF professional, so financial advisors, accountants in fund managers, stockbrokers, who have have SMSF clients and are looking for somebody to do the administration service. So the administration service broadly incorporates the compliance element that, that we’ve touched on throughout the podcast, where ensuring that the funds are meeting their their legislative obligations. But also, in addition, because from an audit point of view, there’s two obligations. One is the compliance audit to make sure you’re satisfying the rules. And the other one is that the financial audit, which is that, you know, you’re reporting all the contributions and allocating them to the right place, making sure you know, your franking credits match up, all the dividends are being received, all of the expenses are appropriately attributable to the right place, all that sort of stuff. So, so SMSF admin incorporates all of the the annual requirements for the fund. And then that then pumps it out in respect of set of financial statements. So, so largely, our day to day business, and core business is the collection of the data, the transactional data, for self managed super funds, turning that into reportable data from a regulatory point of view, and a lot of communication via both the the the intermediary, so the the SMSF professionals and the trustees with regards to, you know, confirming that pension payments are made by the 30th of June making sure that contributions are allocated to the to the correct member, you know, ensuring that that assets held in the correct names. And so all of those sorts of other elements. So yeah, so, so the broad compliance administration is is the role that that we play here at super guardian.

 

Fraser Jack 

Fantastic. Sounds like it’s about just having advisors backs,

 

Tim Miller 

correct? Correct. It is ultimately, you know, part of that that relationship is part of that concept that we go back to, from from the the early part of this discussion about the the the management part, and who is who is performing all the various roles for the fund, you know, we’re paying, we’re playing that that key role in bringing everything together from from all the parties, so from the trustee, to their professional, we’re tying it all together to to present the material to the next part of the chain, which is the auditor, and then ultimately lodging the return as a tax agent with the with the regulator.

 

Fraser Jack 

And did you say you’d been around 28 years earlier on?

 

Tim Miller 

I guess I alluded to that by suggesting that, that 1994 was was roughly my start date in the superannuation industry. And, and 99 was when I started in the excluded SMSF space. So I mean, it was hard to do that as like a five year old at the time, but but you know, it’s, it’s been a while it’s been a journey,

 

Fraser Jack 

that long is super Guardian thing, looking after clients.

 

Tim Miller 

So super Guardian, themselves have been around for just an excess of, of 1818 years. So it’s sort of, probably, although I was probably 18 years when I started here a couple of years ago, so it’s probably getting pretty close to 20 years in existence as well. So, so certainly, they’ve been been a big part of this this industry, in the admin space for for a good portion of the existence of the industry.

 

Fraser Jack 

Fantastic. Tim, if somebody wants to continue the conversation or find out more what’s what’s the best way they can do that?

 

Tim Miller 

Yeah, look, I mean, obviously, the best way to do it is if you wanted to jump on to to our website, so be guardian.com.au you get you get a couple of options here or more than a couple of options. But if people want to delve into find out a little bit about our admin, then they can can do that from the site, but also, you know, from what I offer on a daily basis, you know, we’ve got the capacity for people to, to sign up to receive technical updates and an access to you know, my regular webinars And and broader events. You know, it’s been difficult for someone like me who Fraser as you can tell, I like to talk you know, it’s been it’s been I’ve been like a caged animal I don’t like to use that term but I’ve been like occasion over the last 12 months because I haven’t been able to get out there face to face and do what I really enjoyed doing. So you know, we take it a little bit with some some live events in March. We’ve had to delay some during ones obviously with with things happening around the country. So we’ve delayed them to till September in the hope that that we can open up but the capacity to sign up and and hear about what we’re doing next and get our recent tech updates. And that is all possible through our website. Fantastic. So

 

Fraser Jack 

if you’re interested in looking at getting some more information from Tim or from NASA regarding you can jump on the website and sign up to the site for their updates or even attend an event in person. Hopefully one day, fingers crossed 10 thanks so much for coming on and chatting to us today. Really appreciate giving some time.

 

Tim Miller 

Now no worries, guys. I really really love it. As you can tell I enjoy the conversation piece around self managed. So always, always take up the opportunity to have a conversation. Fantastic. Thanks, Tim. Always. Thank you

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