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Small SMSFs develop rapidly

The latest industry research has shown SMSFs with low balances grow to levels allowing them to become cost-efficient very quickly.

   

A significant number of SMSFs considered uncompetitive on a cost basis typically with balances below $200,000 have historically grown to exceed this efficiency threshold in a very short period of time, new industry research has shown.

A Rice Warner study commissioned by the SMSF Association and supported by SuperConcepts found this to be the case when analysing 6000 funds with holding assets of between $100,000 and $200,000 in value at the beginning of 2017.

Rice Warner found by the end of 2017 its sample size had grown to 8000 funds, however, over the 12 months around 2000 had already grown beyond an asset balance of $200,000.

At the conclusion of 2018, the analysis showed around 3000 funds had exceeded the $200,000 cost-competitive threshold, with around 400 in the cohort closed down.

Further, at the end of 2019, just over 3000 funds had balances greater than $200,000 and 1500 funds in the group had been wound up.

“What you see with this over the three years is there’s only a minority of the funds that stay in the range. The biggest single group are the ones that move above the range and there’s a smaller proportion, but still a material proportion, that are actually closed,” Rice Warner senior consultant Alun Stevens observed during an online presentation of the research today.

“If you look at the smaller ones [with balances of] $50,000 to $100,000, the number that close actually rises.

“So what we can see across these ranges quite clearly was the smaller funds were either there because they were in the early phase of their life and they grew quite rapidly … or they are funds that are at the end of their practical life and you see a lot of them get closed.”

As such, there are many SMSFs with small balances remaining in existence for a long time, Stevens noted.

The study into the sector showed SMSFs with asset balances of $200,000 or more are cost-competitive with public offer funds and can be the cheapest retirement saving vehicle when the fund asset pool is in excess of $500,000.

 

 

Darin Tyson-Chan
November 23, 2020
smsmagazine.com.au

 


David Forrest Download David's Adviser Profile

David Forrest

Director
BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

David maintains a strong personalised client service focus, providing tailored solutions for clients.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

Michelle Forrest

Michelle Forrest

Business Finance Manager
B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

With an astute financial acumen and keen interest in business improvement strategies, Michelle ensures the smooth running of the Integrity Financial Advisory practice providing valued management support to our personalised client service focus.

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Jasmine Smith

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

Jasmine’s attention to detail, yet gentle approach, means she is able to solve the trickiest of questions for our client community.

Jasmine has gained her Certificate III in Financial Services qualification.

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Merrilyn Smith

Client Service Manager

Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

Merrilyn’s warm and caring nature continues to endear her to our clients and she has already established herself as a valued member of our team.

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