With efficiencies in SMSF administration software driving down the costs of running an SMSF, the industry should expect to see significant further growth in low-balance SMSFs, says a practice principal.
Speaking to SMSF Adviser, Moran Howlett Financial Planning practice principal Cameron Howlett said outsourcing companies and advancements in software have already begun to drive down the costs of SMSFs, making them more accessible for clients with lower balances.
Mr Howlett said the minimum balance required for an SMSF in the past was around the $300,000 to $400,000 mark.
“That was simply a function of what accountants need to charge to run an SMSF, so subsequently if accountants need to charge $3,000 to $3,500 at one per cent, when you scale that up that’s giving you a funds under management of $300,000 to $350,000.
Mr Howlett said there are now some SMSF services charging as little as $800 per year for a service providing financial statements, tax returns and daily audits giving a full position of the fund.
“Whether that’s a [quality] service or not, I don’t know, [but] when costs come down you might only need a balance of around $80,000 to $100,000 to have money in an SMSF,” he said.
Traditionally, individuals with those sorts of balances have not been interested in SMSFs so the lower costs “open up the ability for people to have self-managed super funds at an earlier age”, he added.
“It will mean that SMSFs become a lot more accessible for clients with lower balances which has already started to happen,” Mr Howlett said.
“Whether that’s right or wrong, I’m not going to comment on that, [but] perhaps that’s where it’s heading.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all