SMSF practitioners need to be able to articulate other structures outside of superannuation to their clients as the limitations of the super environment may no longer deliver the best outcome for their retirement.
At the SMSF Association Technical Day Series in Sydney today, SMSF Association head of technical Peter Hogan acknowledged the numerous issues practitioners faced post-1 July 2017, both with their clients and within their businesses.
“One thing that stands out more than ever is superannuation is not the obvious end result for a lot of your clients’ retirement savings anymore,” Hogan told delegates.
“Many of your clients are still in the early stages of accumulation and the indexation of the $1.6 million cap, which we’ll assume is still in place 20 years from now, though that’s a big assumption in itself.
“So it’s not unreasonable that as time goes on, they may be looking for alternative ways to create additional wealth for their retirement, over and above what they can save inside of superannuation.”
Also, given the limitations on super contributions and balances, SMSF trustees may be looking for opportunities to combine their wealth inside of super with their wealth outside super, he noted.
“They may want to create ‘overall wealth’ to fund their retirement,” he said.
“The mega-wealthy use family offices for putting together structures and doing other things in order to enhance family wealth and create wealth to pass on to the next generation, as well as to adequately cover the current generation.
“I think that’s something we must start thinking about for our clients – rightly or wrongly, your clients may think that the tax benefits of super have been significantly eroded and therefore may want to consider other structures.
“Even if super is the right answer for them, they’d still want you to be able to talk about the alternatives and demonstrate whether they’re better off staying in super, so start thinking about what these alternatives are and what they look like in order to have these conversations.”
