Accountants and financial planners have been called upon to be more vocal in their promotion of SMSFs, with one expert pointing to the opportunity they have been given as a result of the outcome of the recent federal election.
I Love SMSF chief executive Grant Abbott said accountants and planners should consider ‘what could have been’ if the Labor Party had won, but move beyond thinking about how they would have responded to a change in government and engage with superannuants who were in retail and industry funds but may be better suited to an SMSF.
“I was primed and readied to maximise the amounts going from discretionary trusts to SMSFs via contributions, renting business property and, really, whatever was legally possible and signed off by the Commissioner of Taxation,” Abbott said in a blog post on his website.
“Labor lost. Morrison won. SMSFs have hit the 600,000 mark and $750 billion in assets and the momentum is back in SMSF land. It is time to start to get some SMSF focus.
“There is more than $700 billion sitting in retail and industry super fund accounts for members under age 50. Many in their 40s have been working for 15-plus years, which is a lot of SGC (superannuation guarantee contributions) and if in a relationship, their combined super tops $300,000 or more.
“They are prime targets for education on the benefits of a SMSF. If you don’t know them, let me remind you to get you motivated. There are clients out there and their friends and families to be won.”
He pointed out SMSFs had a number of benefits over retail and industry funds, including the ability to allow members to provide for family members and themselves during their lifetime, in ill-health and at time of death.
“The SMSF is by far the most flexible, most targeted and most tax-effective vehicle to provide lump sums or income streams to a member’s spouse, children or grandchildren when the member dies — and it lets the member control the process without fear of legal challenge,” he said.
He said these benefits were additional to the ability to create an income stream for retirement and provide investment choice for fund members within a lower tax-rate environment that has been sanctioned by the government.
“Many industry and retail super funds will tell you all the above is achievable in their funds. And that is the case, but the members of these funds are completely disengaged,” he noted.
“They sit in balanced funds, even late into retirement, and if the market falls, so does their security of income and also the monies to pass onto the next generation. In a SMSF, members are engaged and it is incumbent upon us, as advisers, to encourage that engagement.”