The latest Vanguard/Investment Trends SMSF Report, based on the responses from almost 5,000 SMSF trustees, indicates that in the past 12 months, 17 per cent of SMSFs have considered closing their fund and moving to an industry fund and 3 per cent have considered moving to a retail super fund.
According to the report, the proportion of SMSFs looking to move to an APRA-regulated fund has jumped substantially since 2013, when just 4 per cent of SMSFs were considering moving to an industry super fund and 2 per cent to a retail super fund.
Based on some of the verbal responses, Investment Trends chief executive Michael Blomfield said some of the key reasons around this were cost and the time required for managing the fund.
“In some cases, it’s costing more than they thought it would cost, it’s taking more of their time than they thought it would take, and perhaps they’re busier than they thought they would be,” Mr Blomfield said.
“There are also some people who’ve received poor advice on investment strategies or they’ve made poor investment decisions themselves.”
The report stated that 15 per cent of respondents said that managing their SMSF is more time-consuming than they expected.
Despite the advancements in technology, it also shows that the amount of time spent running an SMSF has not decreased. The number of hours spent running the fund per month has actually increased slightly from 7.6 hours a month in 2011 to eight hours a month in 2019.
Keeping up to date with legislative regulations and ongoing monitoring and reporting are the two areas requiring greater time, according to the report.
The most challenging aspects of running an SMSF, the report said, were choosing what to invest in and keeping track of changes in rules and regulations.
Investment Trends senior analyst King Loong Choi noted that while one in five SMSFs have thought about closing their fund and moving to an APRA-regulated fund, the number of SMSF trustees who are actually winding up their funds is much lower than this.
The ATO statistics on SMSF wind-ups for the 2017–18 financial year indicate there were approximately 20,430 wind-ups across a total of 584,802 funds.
Given I don’t want to invest my super in direct property, can anyone tell me why an SMSF has any advantages over say NetWealth?
The main advantage with an SMSF seems to be that my accountant can give me much more help (reg 7.1.29 AFSL exemptions for self managed funds – tax advice & implementing admin etc) than they can with Netwealth.
I’ve seen lots of clients frustrated with not being able to get the advice easily over the past few years. They ring up for some basic advice and their accountants says, sure I can answer that for you but it will take a couple of days and here’s a fact find of nonsense you need to fill in. Or I can send you factual information straight from the ATO website so you can misinterpret it how you feel, as long as accountant isn’t giving you perceived advice.
I’d be annoyed too if I was a trustee.
Its the law, at least you are one of the few accountants who are following it so well done.
10% of my funds have wound up in the past 12 months. But, 10% of new ones have started. I think there are opportunities for people prepared to make the effort in this space, but running an SMSF requires a lot of time and expertise and far too many people set-up with the expectation that it will “all be done for them”. Self-managed should mean just that!