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Investments, Strategy

Trustees not reaping full benefit of SMSFs

SMSF benefits

Many trustees are too busy to implement an investment strategy for their fund that will maximise the benefit of having an SMSF, a superannuation expert says.

Many trustees are letting their funds sit in cash and are failing to maximise the investment benefits of having an SMSF, according to a superannuation expert.

HLB Mann Judd superannuation director Andrew Yee said a significant number of trustees appeared to have insufficient time to manage their SMSF and were not implementing a “proper, well-thought-out investment strategy” to maximise their retirement benefits.

“This is more prevalent where the trustees are still working or running businesses and don’t have the time to attend to the investment and management of their SMSF,” Yee said.

“They may only see their SMSF accountant once a year to sign off the accounts and annual return. They may have set up their SMSF without engagement to the concept of self-management or without fully realising their responsibilities as trustees.”

Highlighting the importance of having an effective SMSF investment strategy, he said trustees would benefit from seeking specialist advice to help them implement a strategy for their fund.

He also pointed out a two-fund superannuation strategy might be a better option for some trustees.

“It can be a good idea if there is a specific reason for [having a two-fund super strategy],” he said.

“For example, a businessperson may acquire or transfer a business property into the SMSF and then lease it from their fund. To establish the SMSF, it may transfer a sum of benefits from their public offer super fund to the SMSF in order to complete the acquisition.

“But if they still have benefits remaining in their public offer fund, they may choose to maintain that fund in order to pay the existing life insurance premiums or have those super monies fully invested by investment professionals.”

Earlier this year, he noted an increasing number of SMSFs were being established to play a more specific role in client wealth building and retirement activities, with fewer clients inclined to roll all of their retirement savings into an SMSF.

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