The number of people establishing self-managed superannuation finds (SMSF) continues to increase.  People are enticed by the prospect of having control over their own superannuation affairs.  But in my experience, people don’t realize the full extent of what they are getting themselves into. Having control may be desirable, but being your own administrator, accountant and investment adviser is very challenging and can be a trap for many SMSF newcomers.   Although it is easy to outsource all of these knowledge gaps, the resulting cost structure can be very expensive. In many cases, people set up SMSFs without doing enough homework.  Often they fail to reach the objectives they set for themselves and could have been better off choosing an appropriate APRA-regulated fund. In my experience, people don’t understand the wide range of superannuation choice available.  Unless a member investor particularly wants to invest in direct property through superannuation, other forms of superannuation should also be considered before the decision is made to set up a SMSF. ASIC (The Australian Securities and Investments Commission) is also concerned about trustee knowledge gaps.  The corporate and financial services industry regulator has weighed in recently and, as part of its SMSF taskforce activities, has outlined a range of factors it believes are important for financial advisers to discuss with their clients. Conversely, anyone considering a SMSF should seek unbiased advice before acting.  In particular, more information should be sought and greater consideration given to:

• the roles and responsibilities associated with being a trustee of an SMSF
• the time, cost and resources required to run an SMSF
• the risks associated with an SMSF structure (ie, not having access to a government compensation scheme)
• whether the investor has the necessary skills and expertise to make investment decisions for the SMSF
• the importance of asset diversification
• whether the investor’s investment strategy will deliver the returns required to adequately fund their retirement; and
• the advantages and disadvantages associated with a switch from an APRA-regulated fund

Check out the ASIC Moneysmart site to read a little more about how a SMSF works https://www.moneysmart.gov.au/superannuation-and-retirement/self-managed-super-fund-smsf Call me for a free 1-hour overview of a SMSF where I will give you a balanced explanation of both the opportunities and responsibilities that will be placed on you and your family as trustees.  Contact me at Gary Weigh & Associates Business consultancy Australia on 0408 756 531 or gary@garyweigh.com

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