The SMSF Professionals? Association of Australia (SPAA) is now recognised as the peak body for professional advisors and the leading association within the SMSF industry in Australia – a role that will not reduce in importance any time soon.
So why are SMSFs so very popular? Graeme Colley, Director Technical and Professional Standards for the SMSF Professionals? Association of Australian (SPAA) offers the following suggestions.
“The reason people have an SMSF is that they can contribute to controlling their own destiny,” says Mr Colley. “They can mould the investment strategy for the fund to meet their needs and to make sure the investments are suited to their stage in life. Also, they pay only for services which are appropriate to their circumstances in the fund.” Mr Colley points out that if the trustees do not personally have the skills they need to run their fund, they can contract relevant professionals of their choice, such as accountants, financial planners and lawyers.
There are a number of flexibilities associated with SMSFs. “Trustees are able to time investments to try to take advantage of the best times in the markets and they can ensure the taxation legislation is used to its greatest advantage for the fund,” says Mr Colley. “Moving from accumulation phase to pension phase can be used effectively in an SMSF as members can make decisions which may provide a number of tax benefits.”
Depending on the value of assets within your fund, SMSFs can be cost effective compared to other types of superannuation accounts. As a general rule the larger the value of investments in the fund the cheaper it is to operate. “It is estimated that a fund is cost competitive where the value of the fund investments is about $200,000,” says Mr Colley. “Cost may not be the sole reason for establishing the fund though, and a lower balance may be appropriate if there are amounts to be rolled over to the fund or there are substantial contributions coming into the fund within a relatively short period.”
SMSFs have a number of estate planning advantages whereby the beneficiaries are able to use the fund to ensure the underlying investments are suited to the fund?s circumstances. In some cases it is possible to use an SMSF for the intergenerational transfer of assets through to family members.
The satisfaction of looking after your future by running an SMSF
“One of the great pleasures in having an SMSF is that you are looking after the retirement savings of the fund members, including yourself,” says Mr Colley. “People enjoy the feeling of accomplishment with successful long term investment to assist them to have a long and worthwhile retirement.”
Our annual SMSF star ratings report analyses 141 SMSF savings accounts from 66 institutions to determine those that provide the best value for investors.