by David Buchanan, Director & DLA Private Wealth
In a recent report by the Australian Prudential Regulation Authority (APRA) there were 590,102 Self-Managed Superannuation Funds in Australia at the close of the March 2017 quarter [1]. This represented an increase of more than 22,000 SMSFs since March 2016, suggesting that Australians favour managing their own retirement savings. So, why are SMSFs so popular?
It seems that more and more people are seeking to control their retirement savings and have greater flexibility in investment decision making. However, there are a number of important matters that need to be considered when making the shift from an industry or retail fund to a SMSF.
If you are a business owner or individual who has a strong understanding of investing, and you enjoy having hands-on control over your investment decisions including property, a SMSF may allow you to customise the role of superannuation in building your family wealth, retirement funds and estate plan.
Understand your obligations
Before deciding whether a SMSF is appropriate for you, you will first need a clear understanding of your obligations. In simple terms, a self-managed super fund is exactly that: a potentially tax effective retirement savings vehicle that you, as the trustee of the fund, will need to manage in its entirety. This means that you will be responsible for everything, from deciding upon your contribution and investment strategies to complying with stringent laws surrounding SMSF administration, including mandatory reporting.
While this might sound a little daunting, there is professional support at hand. Representatives from DLA Private Wealth are authorised to provide you with SMSF financial advice whilst DLA Partners are qualified to manage your SMSF administration and your retirement investment strategy.
Consider fees and charges
If you are considering a SMSF as a mechanism to potentially save on the fees and charges incurred by your industry or retail fund, the authorised representatives from DLA Private Wealth are available to discuss your situation. They will help you weigh up relative costs and savings with the aim of determining whether any savings from a DIY approach would be worthwhile. Generally speaking, for a SMSF to be viable from a fees and charges perspective, your super balance needs to be $200,000 or more. Your industry or retail super fund annual statement outlines the fees you pay for funds under management.
How you may use your SMSF
It’s also important to have a clear understanding of how you may use your SMSF. While self-managing your super fund allows flexibility for investing your retirement savings according to your investment preferences, there are strict rules. For example, you may also be able to borrow funds from your SMSF to purchase income-producing assets including property, but you cannot access your super funds to buy items for personal use such as a boat or travel. The sole purpose of your SMSF is to hold and grow retirement savings.
Seek advice
The bottom line is that a SMSF may or may not be appropriate for you. The key is to seek advice from a licensed professional who can provide a clear insight of the positives and negatives of a SMSF as it would apply in your specific financial circumstances.
You’ll be pleased to know that DLA Partners offer SMSF administration and management services including the establishment of SMSFs by authorised representatives of DLA Private Wealth, compliant with legislation introduced in 2016 for advising on investment strategies.
For an obligation-free discussion about your options, please contact your manager or partner at DLA Partners or DLA Private Wealth on (07) 3863 9444 or email clientservices@dlapartners.com.au
[1] http://www.apra.gov.au/Super/Publications/Documents/2017QSP201703.pdf
General Advice Warning and Disclaimer
The information provided is general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Ltd adviser before you make any decision regarding any products mentioned in this communication.
Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS Wealth Ltd nor DLA Private Wealth Pty Ltd, nor their related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.