The main game
SMSFs are the main game in superannuation. Australian Taxation Office (ATO) figures point to record member numbers, soaring average assets and a growing interest from younger people.
SMSF membership has cleared the 1 million barrier and ATO figures to June 2015 show the total number of self-managed superannuation funds exceeds 557,000, a hefty rise from 440,000 in June 2011. This is more than a grand final crowd and should put an end to the continued commentary predicting the topping out of funds.
New member groups
Younger investors and women are signing up in droves. ATO figures show the median age of SMSF members of newly established funds in 2015 fell below 50, while the lower end of the 35 – 44 age bracket is a hot spot. A generation of younger people who have benefited from compulsory superannuation now want to have greater control over that money and their finances in general.
The shift to more females entering the SMSF space is also a potential game changer. With women having a longer life expectancy than men, some analysts envisage females becoming the dominant gender within SMSF memberships and dictating service needs.
At Novo Super this change is certainly evident within our growing community and it’s exciting to finally see many of the groups that we set out to help becoming the next wave and bringing new service needs and expectations with them. It forces our business to remain nimble and continually evolve.
However, the Women and SMSFs: Empowering and Supporting SMSF Members on Their Investment Journey study suggests that men are still far more likely than women to have initiated the establishment of their SMSF, so the journey has a long way to go.
The competition’s feeling the pressure
Growing fund numbers and rising average assets mean SMSFs are one of the fastest-growing sectors of the Australian super industry. In the five years to June 2015, SMSF total assets rose 44 per cent, or A$181billion, while total super assets grew by 51 per cent, or A$686billion. SMSFs contributed 26.4 per cent to the proportion of overall growth, while industry funds accounted for 26.6 per cent.
Others believe the “golden years” for the sector may be yet to come as the changing behaviour of trustees – switching from a do-it-myself super savings approach to a help-me-do-it approach – leads to new growth.
The game report
Superannuation assets in Australia now total more than A$2trillion – and SMSFs are a significant part of the story, accounting for 29 per cent of total super assets, or A$590billion.
Their presence has been credited with shaking up the super sector and limiting the rise of industry and retail funds.
Nevertheless, there is a significant level of responsibility that goes with running an SMSF, especially in the current environment where markets are more volatile than normal and are delivering relatively low yields.
Source: The remarkable rise of the self-managed super fund, 1 August 2016 by Cameron Cooper
For those considering this option for their superannuation, it’s important to get the right advice. From 1 July 2016, the right advice must come from a recognised accountant that is appropriately licensed.