Is an SMSF right for me?

About the author:

Terri Bradford
Author name:
By Terri Bradford
Job title:
Director, Wealth Management
Date posted:
29 September 2020, 2:50 PM

It seems Australians have been thinking more and more about the benefits of self-managed super funds (SMSFs) as they express concerns about their existing super fund in relation to transparency, liquidity and flexibility.

Despite the control, involvement and flexibility an SMSF can provide, there are a few things people need to consider before deciding if an SMSF is right for them.

Ask yourself the following questions:

  1. Is the fund strictly for benefits in retirement?
  2. Do you have the time to manage your own fund?
  3. Will the benefit be worth the cost?
  4. How will switching to your own SMSF affect your current superannuation benefits?

Having your own super fund to manage may sound easy. However, as you are the trustee of your own fund you are ultimately responsible for every decision you make. You need to understand there are some things you simply cannot do within your SMSF.

The regulator, the Australian Tax Office, will apply heavy penalties against trustees who break the law.


How much is enough?

This has been a hotly debated issue since the inception of SMSFs. Different people have different ideas as to exactly how much is needed to set up an SMSF. ASIC has recommended at least $500,000 for an SMSF.

It can be argued that people with less than this could easily manage their own SMSF, particularly if they are planning to make large contributions over time and/or have experience with investing.

The issue, of course, is cost. To remain cost effective it is generally accepted that the greater amount of funds pooled within the SMSF, the lower the cost average. Over the long term, as the SMSF account balance grows, the cost of running the fund becomes even more efficient.

Paul and Mary Bill and Eillie
SMSF Total $500,000  SMSF Total $100,000 
Estimated Upfront Costs
Establishment Fee # $700 Establishment Fee # $250
Initial Transaction Costs $6250 Initial Transaction Costs
Percentage upfront cost 1.39%  Percentage upfront cost
Estimated Ongoing Costs (pa)
Ongoing SMSF Administration Fee^
$1518 Ongoing SMSF Administration Fee^  $1518
Annual ATO Levy
$259 Annual ATO Levy
Ongoing Portfolio Fee** 
$4,950 Ongoing Portfolio Fee**
Ongoing Company Fee* $53
Percentage ongoing costs 1.36% Percentage ongoing costs 3.1%

# Paul and Mary are using a Corporate Trustee structure, which means an additional $455 ASIC fee. Bill and Ellie are using an Individual Trustee structure, so the only cost is the SMSF Trust Deed. * The ongoing company fee is a reduced ASIC fee because Paul and Mary are using a shelf company as the corporate trustee, and not an existing company. A shelf company acts as the corporate trustee only and is not associated to any other entity activities. ^ Administration fees charged by Morgans Wealth+ SMSF Solutions service and includes annual audit fee. This is an indicative cost only as the actual fee will depend on the administration/accountant service used. ** Ongoing portfolio fee - estimated average Morgans' Wealth+ fee

Size does matter 

In relation to costs, clearly size does matter. There is a significant difference in the ongoing costs for Bill and Ellie compared to Paul and Mary. Even where Paul and Mary incur additional costs due to the corporate trustee structure, their average costs are less than half Bill and Ellie's.

Explore your options

Morgans offers an all-encompassing portfolio administration and SMSF administration service that allows you to take advantage of the flexibility and control of an SMSF, but outsource the work involved in establishing and running your fund.

Alternatively you can access our SMSF administration-only service that provides fund administration without the portfolio administration.

Contact us

If you would like to discuss whether a self-managed super fund is for you, or you would like to know more about what is involved in running your own SMSF contact your local Morgans office, or speak to your Morgans adviser.

Contact us 
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