Adviser question: Everyone is talking about starting a self-managed super fund, but how do I know if that would be the right thing for me? One of dmca’s financial advisers and Associate Director, Alison Stanbridge, answers this common question.

While SMSFs are often talked about as a valuable investment vehicle, it is true that this structure is not always suitable for everyone. Starting an SMSF does allow you to take on the full responsibility of the investment decisions of your superannuation fund (as trustee), but there are other platforms where you can also select your own investments.  Before setting up a self-managed superannuation fund you need to consider all your needs, goals and objectives. Professional advice can be invaluable, especially as superannuation laws change frequently.

Starting an SMSF means taking on the full responsibility of the administration. It requires additional time and oversight, even if you use a financial adviser. There are extra costs such as an annual SMSF supervisory levy and audit fees which are required by law. You also need to consider an appropriate trustee structure as there could be problems if members/trustees of the fund die, or if relationships break down.

On the positive side, if you have accumulated more than $500,000 worth of superannuation, there may be real advantages in starting your own fund. Benefits of having an SMSF include:

• choosing your own investment strategy that takes into account personal investment preferences;
• being directly involved in making the day-to-day investment decisions for the fund;
• implementing more tailored estate planning strategies;
• investing in asset classes not available in large funds, such as direct property; and
• investing in commercial property which can then be leased back to your business.

Starting an SMSF can be beneficial, but everyone has different circumstances. If you are thinking about taking this step, please call me for an appointment so we can discuss if an SMSF is right for you.