SMSFs were one of the target areas for the Stronger Super reforms and while SPAA was broadly happy with the proposed measures, it still has some concerns about implementation.
The self-managed superannuation fund (SMSF) was one of the target areas for the Stronger Super reforms, and while SMSF Professionals Association of Australia (SPAA) chief executive officer Andrea Slattery says the association was broadly happy with the proposed measures, there are still some concerns about implementation – in areas such as asset valuations and off-market transfers, for example.
For the most part, though, she believes the SMSF sector will be largely unaffected, and recent ATO figures show that it certainly remains a force to be reckoned with.
In the five years to 30 June 2010, according to ‘Self-managed superannuation funds: A statistical overview 2008-09’, the SMSF sector has been the fastest growing in the Australian superannuation industry, with SMSF assets growing by 122 per cent, compared with total super assets at 60 per cent.
Slattery says there has also been steady growth over the past 12 years in the number of people starting their own SMSF, motivated by an interest in controlling their retirement savings.
This greater knowledge and sophistication means that SMSF trustees are comfortable voting with their feet when dissatisfied with platforms, for example, according to Massey.
“That’s where wrap providers and dealer groups to a certain extent need to be very cautious in terms of how they price their platforms. Because if they’re not seen as good value, people like SMSF trustees are starting to move towards dealing directly with a fund manager,” he says.
Interestingly, the ATO figures show a trend for members of newly established SMSFs to come from younger age groups.
At the other end of the market, Slattery also argues that the SMSF sector is managing the post-retirement phase better than the rest of the market.
“The SMSF sector is actually the only one that doesn’t have a longevity or adequacy issue in retirement,” she says, though she concedes that account balances tend to be higher for SMSFs.
“At the moment, you have got close to 90 per cent of people choosing to remain in a pension with their fund, rather than taking a lump sum.”
This is the exact opposite of the APRA-regulated sector, where 90 per cent take a lump sum.
As the sector grows, there will also be an increasing need for SMSF advice specialists, and financial advisers are grabbing this opportunity with both hands – over the past 12 months, the number of SPAA SMSF Specialist Advisors or SMSF Specialist Auditors grew by 65 per cent.
As well as raising their competency standards, Slattery believes this is an important vote of confidence in the sector – especially as the superannuation landscape evolves.
“It is a more complex area, and consumers are seeking financial advisers they can trust and have a relationship with.”
