Mercedes

ComplianceSMSF Strategies

Growing interest in SMSFs – and they are bullish

25 Nov 2021 2 month(s) ago

Self managed super funds are gaining in popularity, including with younger people.

There are about 22,600 self managed super funds (SMSF) in Australia and they have on average $597,000 funds under management, according to a Vanguard survey. There is clear evidence that the sector is strong and growing and becoming more attractive:

Newly established SMSFs are getting younger and are being set up at lower balances. The average age is now 46 years old:

 

Vanguard says:

"The reasons for setting up an SMSF have changed significantly. Getting control over investments is still the number one reason, but in recent years, a growing reason has been investors’ perceptions that they can achieve better returns through an SMSF:

"Most prospective SMSFs either intend to maintain a relationship with their current
super fund after establishing their SMSFs or are yet undecided. Potential SMSF investors primarily want to keep their current super fund for their
good performance or because contributions are paid into it. They also desire to
maintain a back-up in case they change their mind."

Vanguard says uncertainty from the COVID-19 pandemic saw a significant shift in SMSFs’ attitudes towards receiving financial advice. An increased portion of SMSF “validators” are now open to receiving financial advice. However, "SMSFs’ changing attitudes to advice has yet to lift their adoption of financial planners" says Vanguard. Here is the breakdown on the use of advisers and planners:

Vanguard says there is "strong demand for more education content from
their adviser, especially around regulatory updates, investment strategy and estate
planning." Advisers are increasing their digital content:

"The low cash rate environment is driving appetite for equities – domestic and offshore. Capital gain expectations among SMSFs have seen large swings throughout 2020 but have begun to stabilise at an elevated level. The bullish sentiment is also reflected in their dividend yield expectations for the next 12 months."

 

Reader note: This is general reporting only and should not be considered in any way to be investment or tax advice. It does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. For more information please read our disclosure statement.

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