More Aussies want control over their retirement savings, with Self-Managed Super Funds (SMSF) now worth a whopping 26% of the $3.3 trillion invested in superannuation. At Poole Advisory, we provide careful financial advice to help you answer the question… is an SMSF right for your financial plan?

What is an SMSF?

An SMSF is a way of growing your wealth for retirement. Unlike the common retail or industry super funds that most Australians use, self-managed superannuation funds are, as the name suggests, self-managed. Each SMSF can have a maximum of four or six members – depending on the structure – who act as trustees and decide on the investment strategy.

There are several advantages to an SMSF, including potential tax savings, lower fees, leveraging options, and flexible estate planning. But the chief advantage of an SMSF is that you have more control over what you invest in.

Why are more Australians choosing SMSFs?

According to the ATO, more Aussies are investing in SMSFs than ever before. At the end of the 2022 financial year, there were 1.1 million SMSF members. Many experts believe this number will grow and predict a promising future for the SMSF sector.

For a long time, the Australian Securities and Investments Commission (ASIC) recommended a minimum $500,000 balance for SMSFs to be cost-effective. But research has helped overcome the idea that SMSFs are only for ‘wealthier’ or ‘mature’ investors.

In a study commissioned by the SMSF Association in February 2022, researchers from the University of Adelaide examined data from over 300,000 funds. They found that SMSF balances over $200,000 performed on par with larger industry and retail funds.

Would you benefit from setting up an SMSF?

Your superannuation is one of your most important retirement assets. An SMSF is ideal for investors who want more choice and control.

If you’re currently invested in a retail or industry fund, you may only have a surface-level idea of what assets you’re invested in. For example, you might know that 35% of your fund is in ‘International Shares’, but you don’t have control or transparency on exactly which companies you own shares in.

An SMSF empowers you to choose the exact assets you’ll invest in, decide on your level of insurance and control the level of risk according to your overall financial plan.

How do you set up an SMSF?

All SMSFs are regulated by the ATO. They recommend an 11-step process to set up your SMSF:

1. Choose an SMSF structure: there are two types of structures you can choose from, either individual trustees or corporate trustees. Each structure has different legal and regulatory requirements.
2. Appoint trustees: not everyone is eligible, so you need to determine your eligibility to become a trustee or a director of a corporate trust before you sign the trustee declaration.
   
3. Create a trust deed: this is the document that legally establishes your fund.
4. Meet the three residency conditions to be an Australian super fund: these ensure you have a complying super fund and receive tax concessions.
   
5. Hold assets: members can contribute assets for the fund to hold.
   
6. Register your SMSF: you must register your fund and obtain an Australian Business Number and a Tax File Number.
   
7. Set up a bank account: you need an account to conduct transactions and keep the assets separate from personal or business finances.
   
8. Get an electronic service address: this enables you to receive super contributions from your employer.
9. Create an investment strategy: a regularly reviewed investment strategy is required by super law.
10. Plan for the future: protect fund members from unforeseen events with insurance and death benefit nominations.
11.   Plan an exit strategy: in case things change or go wrong, a careful plan to wind up your SMSF will help.

While 11 steps may seem like a lot, you won’t have to do any of these steps on your own. As a financial planner with expertise in SMSFs, Poole Advisory can guide you through the steps to make the whole process faster and easier.

How do you maintain an SMSF?

It does take time and effort to maintain your SMSF. You bear responsibility for the performance of the fund, which means you need to research investments and make decisions according to your investment strategy.

There are legal and regulatory obligations too. You need to keep up to date with changes in superannuation and tax laws, maintain accounting and appropriate records, and arrange an audit each year with an approved SMSF auditor.

There are also ongoing costs associated with running an SMSF, such as:

•   accounting and auditing
•   administration
•   investment management
•   legal advice
•   financial advice
•   insurance premiums.

What are the pros and cons of SMSFs vs other superannuation funds?

Poole Advisory can help you set up and manage your SMSF

Poole Advisory can provide financial advice on whether an SMSF is right for you. It’s important that your SMSF aligns with your overall financial goals, risk tolerance, and retirement timeline.

We can guide you through every step of the SMSF process, including:

•   asset allocation, diversification and selecting suitable investments within your SMSF
•   optimising the benefits of your SMSF and navigating the complex financial decisions
•   advice on contributions, pensions, estate planning and tax strategies
•   help you stay informed on regulatory changes and ensure compliance with your record-keeping obligations.

Poole Advisory is based in Bowral in the Southern Highlands, but we also have an office in Sydney and offer online meetings – so our clients come from all over. Get in touch with Poole Advisory to discuss how an SMSF can be a critical part of your financial retirement planning or book a complimentary introductory consultation with our Principal Financial Advisor, Anthony Poole, today.

Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917