Control over retirement income investments, rather than costs, has been identified as the chief reason for the establishment of most SMSFs, the SMSF Association has said.
According to a survey of nearly 800 SMSF trustees conducted by the association, the leading reasons trustees choose an SMSF are control, flexible investment choices, dissatisfaction with their existing fund, and tax and estate planning.
“In a nutshell, it’s individuals wanting to take control of their financial future,” association chief executive John Maroney said as part of the launch of a new information flyer outlining the reasons some trustees and members may have for establishing a fund.
Referring to new research on running costs, which showed SMSFs were competitive with Australian Prudential Regulation Authority-regulated funds based on costs and investment returns, Maroney said it was also important to focus on the qualitative factors that often took precedence when setting up an SMSF.
“The long-standing debate when comparing an Australian Prudential Regulation Authority-regulated fund with an SMSF is typically restricted to a simple analysis of costs and returns,” he said.
“But the reality, as the association’s new flyer highlights, is not that simple, with an individual’s desire for control over their own personal retirement income goals also playing an important role in the decision-making process.
“The association has always believed this to be the case. Individuals who opt for an SMSF are those for whom being able to directly influence their retirement income strategy is very important.
“In many instances they are small business owners who not only like having that control, but believe they can execute it responsibly, especially, in many instances, when they have an SMSF specialist advising them.”
The survey also found eight out of 10 trustees believed their SMSF was good value for money and nine out of 10 trustees believe managing and engaging with their own SMSF provides them with a level of satisfaction, with most spending between one to five hours a month administering their fund.
