SMSFs

Self-funded retirees understand the capital risk in holding the ‘big four’. It’s one they’re prepared to take knowing their effective grossed-up yields are much higher than the nominal figure.

The government may have proposed it as a “modest” change to the super system, but the effects will be far reaching. For advisers dealing with this latest regulatory intervention, a handful of key questions need answering.

Institutional investors get it. So do some financial advisers. But for most SMSFs, sovereign and corporate debt is the forgotten asset class – despite the defensive benefits it can deliver.

The Aged Care Act, achieved with rare political cooperation, will put residential and home care on a more sustainable basis with individuals’ contributions more closely attuned to their financial position.

More and more SMSFs are being set up without the assistance of a financial adviser. As the gulf between demand and supply widens, consumers are looking at alternative sources of information for their self-directed retirement needs.

In the 2019 federal election, Labor’s proposal to abolish cash refunds for excess franking credits went down like a lead balloon. So, will the $3 million cap proposal see Labor revisit history?

Tax on unrealised assets is virtually unheard of in Australia, and imposing one on fund members sets a dangerous precedent according to the SMSF Association, which says it’s “completely unreasonable” for retirees to plan for “such a radical departure from existing policy”.

It seems that while the older generations may be tilting towards simplification, the younger generations are looking for control and engagement. For financial advisers, this is a trend worth noting.

There are far simpler avenues to overseas diversification for your SMSF than property, but if you are going to take this complex, and somewhat risky route, you better do your homework.

Both illegal early access and SMSF suitability are known concerns of the regulator, but Sciacca noted that the driver of this review is ASIC’s desire to audit the efficacy of its earlier guidance on SMSF advice. 

The gender gap may be closing in SMSF balances (and at a much faster rate than APRA funds), but it’s still a glacial pace. Class modelling shows that an early boost, combined with the magic of compounding, can redress the imbalance.

In a year when Australian equities far outperformed international stocks, APRA-regulated funds felt the brunt more than SMSF trustees, who still favour the double dipped income of franked local dividends.