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Self Managed Super Funds vs Self Managed Super Wraps

By Bill Alateras, 01/07/2015

The growth in SMSF's in the past 5 years has resulted in additional requirements for many individuals. The members of the SMSF are usually the Trustees of their fund.

Some of the reasons for establishing a SMSF was for control and diversification. With this came the added ATO responsibilities and regulations of being a Trustee of your SMSF.

SMSF's ARE APPROPRIATE FOR SOME INDIVIDUALS BUT IT IS NOT FOR ALL.

During the past 5 years (June 30th, 2014 - ATO statistics) there have been 177,556 SMSF's establihsed in Australia.  In the same 5 year period there have been 48,865 SMSF's closed.  

During the past 5 years over 27% of the SMSF established have been closed.  This reflects the suitability of SMSF for some individuals who found the requirments and regulations complicated.

The administrative costs of a SMSF will vary with the size of the fund. The ATO statistics show that the average cost of a $500,000 SMSF is 1.35% pa. This cost usually does not include ogoing advisor fees.

What is the alternative if we require control and diversifiction of your super to invest in Bank Term Deposits, Shares, Indexed Funds and Managed Funds. The Self Managed Super Wrap (SMSW) is a simple option with control, diversification, no trustee responsibilities and low total annual costs.

THE BENEFITS OF THE SELF MANAGED SUPER WRAP: (SMSW)

1. Control your investmet strategy with your advisor.

2. Diversified investments: Term Deposits,Indexed Funds,Direct Shares & Wholesale Managed Funds.

3. No Trustee Responsibilites or requirements and reduced paperwork.

4. No accounting or auditing costs. (included in the total annual fees)

5. Total annual fees with ongoing advisor service are approximately 1% pa net.(Based on $ 500,000)

6. No establishment costs and no exit fees.

7. Simple consolidated reporting available online 24/7.

THE DISADVANTAGES OF THE SELF MANAGED SUPER WRAP: (SMSW)  

1. Investing in Direct Property is not available.

2. Direct shares are limited to the ASX 300.

3. Require the services of an advisor.

If you wish to maintain your SMSF there is the option to use the Self Managed Investment Wrap to provide consolided reporting and ongoing advice.  You will require the services of an accountant.

If you require further information please do not hesitate to contact our team at CIFP.

CIFP manages both SMSF's and SMSW's and provides the most suitable option for each individual client based on their objectives and requirements.