Tim Sullivan, a private wealth adviser and director of Integro Private Wealth, told SMSF Adviser, that with the proposed $3 million super tax on the horizon, SMSFs need to be able to determine a whole of wealth picture to know where their assets are and how much they are worth to be able to properly plan their retirement and avoid any tax impositions.
“In the past advisers may have only reported on what they are looking after. Whole-of-wealth reporting incorporates it all into a complete picture,” Mr Sullivan said.
In a panel discussion during this/last week’s SMSF Adviser Technical Strategy Day, speakers emphasised that being able to have a complete picture of an SMSFs portfolio including investments and liabilities, will be integral for the quarterly reporting changes which are imminent.
Andrew O’Meagher, director of Act2 Solutions, said the reporting requirements will also mean communication between an SMSFs financial advisers, including accountants, will need to be streamlined.
Mr Sullivan said whole-of-wealth reporting will help facilitate this.
“Integro Private Wealth works with all business partners, accountants and trusted advisers to help create a complete picture,” he said.
“It is important to get a whole-of-wealth picture, by linking all those professionals together.”
Having a whole-of-wealth picture will also be beneficial in determining where an SMSF may lie in regard to the $3 million cap, he said.
“SMSFs may have to make decisions around where they sit in regard to that $3 million mark,” he said.
“They will need to know what they are getting from other entities and structures and it is important they engage with all the professionals involved in their SMSF to get that complete picture.”
He said with a whole-of-wealth approach, SMSFs will be able to determine if they are maximising each structure in which they have investments or assets that will support them in making better decisions moving forward.
Mr Sullivan said he is already seeing a change in the way in which SMSFs are investing.
“We are seeing more SMSFs, especially in the pension phase, opting for cash or term deposits more so than in the past,” he said.
“Getting a return on defensive assets like term deposits is now playing an important role in SMSFs especially in the pension phase where they are trying to generate a certain level of income.”
He added that with interest rates now between 4.5 per cent and five per cent, SMSFs are returning to cash and term deposits as safe options.
“What used to be old has come new again and because rates have gone up, every part of a portfolio can now give a return,” he said.
An interesting article – thank you. It is difficult investing as you get older, but alas, term deposits, whilst interest rates are better than they have been are returning a rate say 20% less than the inflation rate, so the return on those monies is negative. That then means more assertive investing is required to allow for this more passive income strategy. So many things to think about.
Good to know that there are financial advisors out there looking at savings and investments wholistically. They are so hard to find.