SMSF establishments to rise again

SMSF establishments rise

After suffering a slight decline in recent years, SMSF establishments look to be on the rise again, according to the latest research into the sector.

The latest industry research indicates the growth in SMSF establishments is set to rise again in the coming years.

While the “2019 Vanguard/Investment Trends Self-managed Super Fund Reports” revealed the annual rate of SMSF establishments is in decline, with 23,000 funds set up in December 2018 and 21,000 set up in March 2019, other factors indicate this tendency is set to reverse.

Another finding of the report showed 4 per cent of respondents in 2018 said they were planning to set up an SMSF in the next year, with this figure rising to 5 per cent for the 2019 study.

A further 11 per cent of superannuation members interviewed online said they were planning to set up an SMSF at some point in the future.

“What we do see is that there is growth in the interest in [setting up an SMSF] and the 11 per cent of those who plan to set up an SMSF at some point in the future is quite important,” Investment Trends chief executive Michael Blomfield said.

Blomfield pointed out the significance of these findings was highlighted by other research his organisation had recently performed with regard to the changing use of SMSFs.

“What we’re seeing through a separate study we released [recently] is that more and more Australians are becoming quite purposeful with their super,” he said.

“More and more people are not falling for the trap of getting a new super fund because they changed jobs. More and more people when they establish SMSFs are actually keeping their APRA (Australian Prudential Regulation Authority) fund intact and using the SMSF as a vehicle to invest other monies.

“[So] what you’ll see is a change from the history of people setting up an SMSF, essentially moving all of their super money into the SMSF, instead will use the SMSF as a secondary vehicle to further accumulate and, particularly when they get to drawdown, to manage that drawdown process more to their liking.”

The reserach was conducted between February and April and processed responses from 4927 investors and 286 financial planners. The study also found SMSF trustees continued to have unmet advice needs.

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