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Advantages of a self-managed super fund

Posted by Northadvisory on December 2, 2019

Advantages of a self-managed superannuation fundSelf-managed super funds (SMSF) are becoming increasingly popular and with good reason.

We spoke to Cayle Petritsch, Director and Wealth Specialist, about the advantages of SMSFs and how North Advisory can help you take control of your future wealth.

Full transparencyFull Transparency

One of the most significant advantages of having an SMSF is full transparency. Unlike retail or industry superannuation funds, an SMSF gives you the ability to track every single transaction that occurs against your account. Cayle explains,

“We find that there are many people who really want to be hands-on with their super. A self-managed fund gives you that opportunity… you are in full control.

By being in control, you are able to see everything that happens within the fund. You can monitor the contributions… you see all the income earned, plus you can review all the expenses… you have full visibility of how your money is performing.

With a retail or industry fund, it’s most likely that you receive a year end statement… but it definitely won’t provide you with the same amount of detail.”

Flexible investment choicesFlexible investment choices

Another advantage of an SMSF is that you have a wide range of investment options available… you can choose to invest your super based on your own interests or ethics. At North Advisory we have SMSFs that invest in anything from shares and managed funds… all the way through to diamonds, gold and property. Cayle says,

“In a retail or industry fund you have very limited choice about where your super is invested. However, with an SMSF you have the ability to invest in a wide range of assets… in fact you can invest in almost anything you want.

There’s much more freedom… think commercial property, artwork or even collectable cars.”

Lower costsLower costs

Within a retail or industry super fund, the higher your super balance… the higher the fees. As your superannuation grows, it can be more cost effective to move to an SMSF. Cayle discusses an example,

“Let’s consider this scenario… If you have $1million in your superannuation and your retail fund charges a minimum 1% annual fee… that’s $10,000 a year. But with a self-managed fund, it’s likely that only have to pay for basic accounting and auditing costs… and these might be less than half that amount.

With an SMSF, you are charged fees based on the services you access to manage the fund. For example, a service provider that oversees the financial accounts and tax returns. Fees are based on the complexity of servicing your superannuation fund rather than just a flat percent of the total amount being managed.

Another thing to consider is that there is a lot of commentary around how much you need to start up an SMSF. We believe the answer to that question is completely up to you… it truly depends on what you want to do.

If you want control and are ready to take a hands-on approach, then an SMSF might be right for you regardless of how much you already have in your super account.”

Move to an SMSF

If you do choose to move to an SMSF we can certainly help you through the process. You can have up to four members within the fund and it doesn’t matter who they are… they don’t need to be related. But we often find that an SMSF is a great option for husband and wife partnerships. Cayle continues.

“It could definitely be cost effective to consider starting an SMSF for a husband and wife… if they both have $500,000 in super, they will be paying high fees in an industry or retail fund… moving to SMSF will save money on those fees.

We just always remind people that having an SMSF does mean being involved. There are tax obligations that need to be met and a level of responsibility associated with self-management. Of course, this is where North Advisory can help… you will be involved, but we look after the administration for you.”

Tax strategiesTax strategies

Self-managed superannuation funds are also subject to the concessional taxation environment. Cayle explains,

“As with other superannuation funds, investment income is capped at 15% tax, capital gains tax is capped at 10%… and of course if you are in pension phase there’s no tax payable at all!

Plus, you have access to franking credits. If you are in pension phase these credits become a refund to you which can help boost your retirement income. There’s been a lot of talk about franking credits over the last 12 months, so it’s important to note, this scheme may not be around forever.”

How can we helpHow we can help

If you are considering moving to an SMSF then we urge you to discuss your options with us. We are fully licenced to set up your SMSF and can manage the process from start to finish. This includes setting up trust deed, registering both an ABN and TFN for the super fund. We help with all the membership documents and the trustee declaration. Cayle says,

“Over the years we’ve helped many clients set up their own SMSFs. They have the advantage of an SMSF without the headaches.

We remove the time consuming administration for you… we look after it all. We know what is involved and we make sure everything is compliant.

As part of our service we run specialist super fund software that allows you to login and access the details of your super… this means you can monitor activity anytime you want. We can help you understand and navigate your way through superannuation legislation and offer advice when you need it.”

If you think a self-managed super fund would suit your needs contact our team today.