Gap between expectation and reality in SMSFs
A significant gap remains between how much time it takes to manage a self-managed superannuation fund and how much time members believe it will take, according to Investment Trends.
Senior analyst, King Loong Choi, said while the existing pool of SMSFs spent 8.2 hours a month managing their SMSFs, members who were contemplating establishing an SMSF believed they would only need to spend 1.9 hours a month managing their fund.
"There really still is a big difference between how much time it takes to manage an SMSF versus how much time they think it will take," Choi said.
The Investment Trends research, which was based on a survey of 20,000 super fund members, also revealed a significant difference between perceived and actual costs of running an SMSF.
While a typical SMSF member could expect to pay around $2,800 per annum in ongoing administration and advice costs, those who were contemplating establishing an SMSF expected costs to be a quarter of that, or approximately $680.
"There's a really big difference between the cost and time it takes to manage a self-managed super fund and how long people think it will take," Choi said.
One-in-five super fund members said they intended on establishing an SMSF at some point in the future, but only five per cent said they were seeking to establish one in the coming year.
"If you actually look at the actual number of self-managed super funds set up in each individual year, what you typically find is that it's only about one per cent of super fund members who actually go ahead and set it up," Choi said.
AUTHOR
Malavika Santhebennur
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