ATO, Superannuation

Sector data has limited relevance

SMSF data

Overall SMSF data can reflect the state of the sector, but has limited application when considered at fund level, an expert says.

Overall SMSF data, such as that found in ATO statistics, can provide a snapshot of the sector, but questions remain about its usefulness and applicability, according to a superannuation expert.

Chartered Accountants Australia and New Zealand (CAANZ) superannuation leader Tony Negline said the whole-of-sector data that made up the recently released SMSF annual data for 2017/18 had limited value as each SMSF was unique.

“We talk about SMSFs in global terms because it gives us some important insights, such as the total number of funds or assets under management,” Negline said in a post on the CAANZ website.

“But once we go beyond these data points, I think looking at global SMSF data is interesting, but I remain unconvinced about its usefulness and applicability to the sector.

“Each SMSF is unique. There are similarities that one SMSF will have with many other funds. But as we know every fund, much like every family or small business, will have important attributes that only it has.”

He said this was evident where the ATO data showed the average SMSF member had more money in superannuation, had more taxable income than the average non-SMSF member and on average was also older.

“This is interesting, but for most of us unlikely to be useful at a practical level,” he said.

For sure it’s important information for a marketing executive at a big financial organisation trying to wordsmith a SMSF marketing campaign …but I can’t think of any such campaigns in the recent past that have been rip-roaring successes even when data like this has been used to frame them.

“Maybe SMSF people are just a bit more independently minded than some like to assume.”

He also pointed out that while the ATO had more exact data related to the cost of running an SMSF compared to an ASIC document published last year, a focus on a single number for costs per fund was hard to achieve across a broad sector.

“We now know the data that ASIC elected to use – average expense data and expected time it takes most trustees to run these funds – were perhaps not as accurate as many suspected,” he said.

“Perhaps a better course of action might have been to give a typical range for data. Whilst more accurate and more valuable perhaps, the marketing people would have been demanding simplicity with the provision of a single number.  

“The reality – some things can’t be reduced to year three school comprehension or equivalent without creating distortions.”

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