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Reforms create low, high-end service gap

SMSF trustees are showing different levels of concern when it comes to the impact of the recent super changes on their fund, resulting in advice and guidance opportunities according to their balance bracket, the latest industry research has found.

The “2017 Vanguard/Investment Trends Self-Managed Super Fund Reports” revealed 31 per cent of SMSFs said they were unconcerned about the impact of the super changes.

However, the remainder of SMSFs demonstrated some level of concern, with 13 per cent stating they were ‘very concerned’, 24 per cent indicating they were ‘somewhat concerned’ and 30 per cent saying they were ‘a little concerned’.

“Based on how much they have in their SMSF, the level of concern varies – those with a balance of $1.6 million are much more concerned than those with $1 million to $1.5 million because they know that the transfer balance cap is going to affect them,” Investment Trends head of wealth management research Recep Peker told media at the launch of the research this month.

“Those who are at the lower end, less than $500,000 in their SMSF, are also concerned because they know that the concessional and non-concessional contribution caps are going to affect them.

“So the sweet spot for SMSF trustees is when you have about $1 million to $1.5 million.

“And the legislative changes provide opportunities for both those who service the higher end of the SMSF market and the lower end of the SMSF market.”

The research also identified that while selecting investments within the wider portfolio construction piece was one of the hardest aspects of running a fund, fewer SMSFs believed it was a challenge this year compared to last year.

“When there’s so much volatility and uncertainty, you’d expect this to be one of the hardest things for SMSFs, especially coupled with the low interest rate environment,” Peker said.

“But what we’re seeing here is that fewer believe it’s a problem, though it is still a prominent issue.

“What has become more prominent is the regulatory uncertainty where 31 per cent identified keeping track of changes in rules and regulations, and understanding changes to rules and regulations were the hardest aspects of running their fund.

“The impact here is varied based on the balance that the SMSF has and also based on their knowledge and engagement with the market.”

The research was based on online surveys conducted between February and March, making up the “SMSF Investor Report”, “SMSF Planner Report” and “SMSF Accountant Report”.

Responses from 3020 SMSF investors, 479 SMSF financial planners and 945 SMSF accountants were analysed as part of the research.

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