What’s what in self-managed super funds

  • Staff Reporter | May 22, 2018
SMSF Advisers - Skills

The superannuation scheme in Australia is designed to ensure people have a comfortable nest-egg of savings on which to retire on.

Your super savings will either replace or supplement the aged pension, which some sources estimate only covers about a third of the money needed to live comfortably.

With both life spans and cost of living ever increasing, it goes without saying that getting your super right is incredibly important! Over a million people have turned to self-managed super funds (SMSFs) for more control over their investments.

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SMSF advisers are specialist financial planners who can provide advice and direction on setting up and maximising the growth of clients’ SMSF.

What is a self -managed super fund?

No surprises here — a self-managed super fund is a private superannuation fund that is managed by its members instead of an external fund manager. Members get to decide exactly how their money is invested and handled.

SMSFs are an alternative to “traditional” funds which are on offer from financial institutions (retail funds), industry groups (industry funds), large employers (corporate/employer super funds) and government (public sector funds).

You can set up your own private super fund and manage it yourself, but only under strict rules regulated by the ATO. An SMSF can have between one and four members, with each member acting as a trustee.

Benefits of an SMSF

There are lots of benefits to investing via a self-managed super fund, not least of which is that trustees have much more control over how the superannuation is invested, compared to any other type of fund.

SMSFs also allow the trustees to do clever things like purchase investment property through the fund or invest in collectibles (like wine, art or Star Wars action figures maybe!)

More good news - nearly three-quarters of SMSF members are satisfied with their SMSF versus 61% of members of other types of funds.

How SMSFs are invested

Pitfalls of SMSFs

Despite the number of people saying they’re satisfied with their SMSF, AMP Capital research found that 83 percent of SMSF trustees face difficulty managing their fund. Setting up and managing a self-managed super fund is a lot of work. It’s not just the initial set up paperwork (and money) but also taking the time to continually research your investments, as well as compliance, accounting and auditing actions required by the ATO.

Plus, for inexperienced investors, gambling with your retirement savings might not be the most prudent course!

Fortunately, a skilled SMSF adviser can help trustees with making the right investment decisions — and take a lot of the work off their plate! The average trustee only has 3.4 hours a month to invest in their SMSF, so there can be big benefits to bringing on someone whose sole job is nurturing your nest egg!

Find out more

As an SMSF adviser, you would help your clients make the right decisions when it comes to their superannuation. And with the number of SMSFs nearing 600,000 in 2017, there’s never been a better time to make a move into financial planning and superannuation. Find a registered training organisation near you.

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