Business News

Number of SMSFs likely to close jumps

The number of trustees that are likely to leave their SMSF has doubled from last year, a recent industry report has found.

The “2017 CoreData SMSF Service Provider Research” revealed 7.9 per cent of surveyed trustees are thinking about closing down their fund within the next one to five years, while 4.4 per cent indicated they were likely to leave their SMSF within the next year.

“What the research is telling us is that there are an increasing number of people who are thinking about closing down their SMSF,” CoreData principal Andrew Inwood told selfmanagedsuper.

“It’s about 4 per cent to 8 per cent of the group and while that’s still a pretty small number, it has doubled from last year.

“What’s really interesting about that is that the number has jumped sharply and while one piece of data doesn’t make a trend, it is still an interesting piece of data.

“Now if that continues next year, then there’s some interesting data that the industry may not be succeeding – if people are starting to leave the SMSF sector, it’s not succeeding.”

Inwood noted the most common reason members were leaving an SMSF was due to death, however, the second main reason was about service and returns.

“If a member has passed away, then of course it makes sense to close the fund, but that’s not 10 per cent of the market; it’s the people who are dissatisfied with the quality of returns they’re getting or how much work they have to do with their fund that is starting to increase,” he said.

“They’re mostly advised by accountants. So the industry is failing in that space.

“This is happening amid phase-two market behaviour after the first rush, like with the iPhone.

“Now, we’re starting to choose which service provider we want, when we want their services and how we want it.”

He underscored this issue as the biggest challenge for SMSF service providers going forward.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital