Three-quarters of advisers says there are more self-managed superannuation funds than necessary, according to a live poll taken at the Conexus Financial Post Retirement Conference in Sydney.
The vote was held during a session discussing the ongoing recommendation of SMSFs, and whether advisers are doing enough to identify and quantify the benchmarks for SMSF appropriateness.
Evan Poole, manager of comprehensive advice services at Sunsuper, noted that there are more than 600,000 SMSFs in Australia, with more than 1,100,000 members.
While he believes this figure suggests SMSFs are over-prescribed, he referred to recent trends at Sunsuper as an indication that this may be changing. Poole noted that roll-ins from SMSFs to Sunsuper increased 124 per cent between 2016 and 2017, while the average roll-in amount increased from $82,000 to $110,000.
“We certainly are seeing much larger numbers of people rolling in from SMSFs, and greater amounts rolling into our funds from those funds,” he said. “We’re not seeing a lot of change in the out-flows, so the tide is certainly turning.”
Poole did express concern that when people roll out of Sunsuper funds into an SMSF, they do so with an average balance of only $83,000, a figure which he called “really alarming”.
“Who is setting up SMSFs for this kind of money?” Poole asked. “It’s astounding that people are doing this and setting up SMSFs with such low values.”
Poole ultimately stressed the importance of advisers regularly monitoring existing funds and the needs of the people that owned them, to ascertain if they are still the right choice for them.
“We need to really think about a goals-based approach to self-managed super funds, looking at clients who are in them and determining whether there’s a need for them to still have that structure, or whether situations have changed.
“There are some very good reasons that people are subscribing to SMSFs,” he continued, “but there are also a lot of people in SMSFs without a good reason, and as advisers, it’s out role to differentiate between the two.”
Another perspective was put forward by Graeme Colley, executive manager of SMSF technical and private wealth at SuperConcepts, who answered the question of whether SMSFs are over-prescribed by saying, “It just depends.”
“Self-managed superannuation funds are fantastic,” Colley said, before identifying control, flexibility, transparency, investment timing, admin costs, estate planning and tax advantages as the primary benefits of SMSF ownership.
He did, however, point out that several myths around SMSF performance need to be dispelled.
“I’ll give you two untrue statements about self-managed super funds, he said. “All SMSFs outperform APRA funds, and all APRA funds perform better than self-managed superannuation funds.
“[Neither is] the case. I think we’d all agree it pertains to the particular client,” he said. “Again, it just depends.”
