The number of Australians setting up a Self Managed Super Fund (SMSF) is quite staggering. According to the ATO, the number of SMSFs has grown 31 per cent over the past five years. There are now about 600,000 SMSFs in Australia, so about 10 per cent of the workforce. SMSFs now account for close to 30 per cent of Australia’s $2.1 trillion in superannuation assets.
Mark Lisle, a partner in Melbourne-based Chartered Accountants and Financial Planning firm Rundles Pty Ltd, which specialises in SMSFs, predicts that the number will only continue to grow. “The majority of our SMSF clients are of retirement age or approaching retirement, but we are now also starting to see SMSF clients in their thirties. The introduction of borrowing in SMSFs has opened things up a bit. “SMSFs tend to attract an older demographic because those people are normally at that point in their life they have enough super to justify a SMSF.
“But they are not appropriate for everyone due to the time, cost and responsibility involved in managing the fund.” Lisle said that each case was unique but suggests that a figure of around $300,000 in super makes a SMSF cost effective. “Purely on a cost-benefit analysis – what they would be paying in a retail fund compared to the costs of running an SMSF – at $300,000, it is usually cost effective to have an SMSF,” he said.
Rundles is a Melbourne institution. It was founded by Noel Rundle, OAM, an amateur football luminary, in 1965. Lisle, one of a handful of sportsmen to have played at the elite level in both basketball (NBL) and football (AFL), has been at Rundles for over 30 years and is an accredited SMSF specialist. The other partners at Rundles, Peter Davison, Brad Roach and Josh Laing, all have vast experience with SMSFs. Lisle said Rundles decided in the mid-90s to make SMSFs a focus.
“It is a highly regulated and quite technical area and, back then, a lot of accounting firms did not want to touch it. It was the opposite for us. We thought this would be a real growth area for our profession. Our objective was, and still is, to offer a complete service to small business and family groups. We believe the SMSF piece is an important part of that service.
“We now have more than 600 SMSF clients, which accounts for about 40 per cent of the work we do,” he said. The remaining 60 per cent is made up of accounting and taxation compliance, business advisory and auditing. Lisle said SMSF administration is now a very competitive space. “Accountants had it to themselves for a long time but now wealth advisers are tapping into the sector and even the banks are getting involved.” SMSFs have been around since the late 70s.
They received a boost in the mid-90s when the government changed legislation to make super more tax concessional. They received a further boost in 2007 when the government made it even more concessional. “SMSFs have grown as superannuation has become more concessional but it has also become fashionable to have a SMSF these days and some people have been caught up in that hype.” Lisle said SMSFs attracted a certain type of person.
“It tends to suit those people who like to control their own destiny – to decide what to invest in and when. You can usually tell straight away whether people have the right profile.” Rundles is also active in updating clients and potential clients on SMSF changes. To this end, the firm issues a quarterly newsletter and also conducts seminars from time to time to explain superannuation changes and address the issues that SMSF clients face.
Lisle said he believes the future of SMSFs is strong. “People like to have control. They often have a general distrust of fund managers. When you manage your own super, there is no one to blame if things don’t go as expected. “For those thinking of starting an SMSF they really should consult their accountant or financial adviser – not just any accountant but a firm that specialises in and is licensed in this area.”
Rundles Financial Planning Pty Ltd is a Corporate Authorised Representative and Brad Roach, Peter Davison, Mark Lisle and Josh Laing are Authorised Representatives of Primestock Securities Ltd (AFSL 239180), a member of Prime Financial Group Ltd.