Home' SMSF Professionals Association of Australia : SPAA Yearbook 2013 Contents 26.SPAA.2013
NEW SMSF TRUSTEES
much more tax-e ective retirement
while sidestepping the trap of excess
contributions tax, and the pitfalls of
not contributing as much as possible
"We are trying to rearrange their
nancial a airs so they can live tax-
free throughout their retirement,"
Hutton says. Currently, they have little
money in super.
As independently minded small
business owners, Hutton says this
couple would be more comfortable
contributing such large sums into a
self-managed fund under their full
control rather than into an industry or
Clearly, the couple could gain
identical tax concessions by
contributing the $2 million to an
industry or retail super fund instead
of an SMSF. "However, they would
not be inclined to put so much of
their resources into a large fund, as
they wouldn't feel the same level of
engagement," Hutton emphasises.
"It is often cited that self-managed
funds o er their members greater
exibility and control," Hutton adds.
"But I think it is more than that." He
believes that SMSF members tend
to become more engaged with their
superannuation and more aware of
the options available. This level of
engagement often leads them to put
more money into super
Although this couple's new fund
is strictly an SMSF, Hutton refers to
it as a "personal super fund". This is
because the couple wants Mann Judd
to provide a full service of nancial
planning (including recommending
the asset allocation and investment
selection), fund administration and
accounting. "The fund is personal to
them, but they don't have to self-
manage it," he says.
SPAA specialist adviser Nick Ali,
44, established his SMSF almost 12
months ago, rolling his super savings
from a large industry fund.
Given his professional knowledge,
Ali is well-placed to compare his
experiences with an industry fund
and his edgling self-managed fund.
A former nancial planner, he is now
a technical services specialist with
SMSF administrator SuperConcepts
Ali found that one of the most
frustrating aspects of being a member
of the industry fund was the time lag
between instructing the fund to make
a change to his investments, and the
execution of the change. "There was
a lack of immediacy; I couldn't do
things straight away."
The main reasons that Ali decided
to switch to an SMSF were to gain
greater control and exibility, and
the ability to invest in a "far superior"
range of investments.
Ali is personally looking after his
SMSF's investment strategy, asset
allocation and investment selection.
Being single, he is the sole member of
the fund and its sole trustee director.
As his fund was just 10 months old
at the time of writing, about 70 per
cent of the portfolio was held in cash
and xed interest. He is progressively
building up its exposure to local and
international shares, mainly using
exchange-traded funds (ETFs).
Ali has adopted a core satellite
approach to investing in shares. His
aim is to eventually have 60 per cent
of the portfolio in a core of equity
ETFs with a much smaller satellite
of direct Australian shares. And the
fund may eventually take a limited
recourse loan to buy a residential
The strategy of increasingly
investing in low-cost exchange
traded funds (ETFs) is signi cantly
reducing investment management
costs; and the xed cost for fund
administration, which is undertaken
by SuperConcepts, is minimal.
Ali describes the process of
establishing his SMSF as a "very easy,
painless process" -- apart from trying
to roll his money from the industry
fund. "That was the hardest part."
He says that the industry fund
initially sent him the wrong forms for
the rollover, then lost the completed
forms and did not ring him back
when promised. Even the cheque
containing the rolled-over super failed
to arrive and had to be reissued.
Michael Laurence is a freelance
journalist and media consultant,
specialising in superannuation and
THE MAIN REASONS
THAT ALI DECIDED
TO SWITCH TO AN
SMSF WERE TO GAIN
AND THE ABILITY
TO INVEST IN A "FAR
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