SMSFs could lead to pain without right advice
|
|
Big West Australian super fund GESB has warned the desire to control superannuation and lower fees through a self-managed superannuation fund (SMSF) could come at a significant cost if not accompanied by the right advice.
GESB has urged Australians to seek advice to ensure this type of fund is suitable for their personal circumstances.
National research conducted by GESB found more than half of those surveyed think it is appropriate to establish a SMSF with a balance of $50,000 or under, including one quarter who think a balance of $5,000 is enough.
The Cooper Review indicated that a $5,000 balance would easily be eaten up in the first year of operation, saying that “very small SMSFs, with $50,000 or less in assets, have average annual operating expenses of 5 to 6 per cent of their total assets.”
Fabian Ross, general manager of wealth management at GESB, said that the rising popularity of SMSFs appeared to suggest that Australians wanted to exercise more control over their super and thought that account fees charged by the major super providers were too high.
“Access to the information required to manage super does not equate to having the ability to interpret or apply this information in an effective and efficient way to ensure an adequate income in retirement,” said Ross.
“People need to understand that the control they are seeking could come at the price of greater risk, cost and personal commitment,” he added.
The GESB survey also shows that only a third of people will consult a professional financial adviser to decide how suitable an SMSF is for their individual circumstances.
GESB said that factors like the time and money associated with administering a SMSF need to be taken into account, along with the desire and ability to manage the fund in the long term, particularly as an individual gets older. How the fund is managed in the event of death also needs to be factored in.
The GESB findings were based on a survey of 1,100 people.
Recommended for you
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
