Between 2014 and late 2024, the prevailing method for determining whether an SMSF qualified as a wholesale or sophisticated investor was based on trustees, as controlling parties, meeting either the net asset test ($2.5m) or the income test (earning $250,000 for two consecutive years).
Updated guidance from the Australian Financial Complaints Authority (AFCA) has said:
"where the financial service relates to a superannuation product, a trustee of an SMSF is classified as a retail client unless the fund holds net assets of at least $10 million at the time the service is provided (‘net assets’ test)."
Further insights reveal that the $10 million threshold is non-negotiable and ensures a fund's capacity to meet robust investment requirements, setting a clear benchmark for compliance.
And also:
"AFCA will continue to consider any service provided to an SMSF trustee pertaining to a superannuation fund as one involving a retail client unless the individual in question can satisfy the $10 million asset threshold for wholesale investors."
This means that even if one or more of the SMSF's members or trustees meet the wholesale investor test, the SMSF, as a superannuation fund, does not automatically meet the wholesale test.
This distinction underscores the independence required of an SMSF to meet wholesale investor criteria, maintaining a clear boundary between individual and fund responsibilities.
An individual, wholesale, or sophisticated investor certificate cannot be extended to an SMSF. The SMSF itself must meet all regulatory criteria independently to achieve this status.
Grow SMSF will not issue or sign any wholesale investor certificates for SMSF customers unless the fund has more than $10m in net assets.
Grow SMSF will not issue or sign any wholesale investor certificate for individual investors because we don't provide taxation services to individuals.
In summary, Grow SMSF strictly adheres to the $10 million net assets rule, aligning with regulatory standards to ensure compliance and transparency.