Industry research into practitioner behaviour has shown both accountants and financial planners are continuing to adopt a conservative approach to determining the minimum superannuation asset balance an individual should have before they are suitable to establish an SMSF.
An Investment Trends study revealed both sets of practitioners are uncomfortable with endorsing the set-up of an SMSF for a client unless they have a benefit balance of at least $300,000.
Speaking at the Chartered Accountants Australia and New Zealand SMSF Conference 2021 yesterday, Investment Trends associate director of research Kurt Mayell told attendees: “On average accountants believe that clients should have at least $300,000 in super before establishing an SMSF.
“This number has consistently grown over the past four years, with the minimum amount rising from just $250,000 back in 2018 all the way up to $300,000 in 2021.”
Mayell then acknowledged financial planners exercised an even greater deal of caution when initiating an SMSF for a client.
“Financial planners on the other hand believe the number should be significantly higher. In 2021 they say that clients should have at least $410,000 as a minimum before rolling into an SMSF,” he said.
He recognised this represented a significant divergence in attitudes, but noted a more consistent approach from both groups may not be far away.
“The good news here is that while the numbers are still $110,000 apart, they are slowly converging and hopefully at some point in the future both groups will be aligned, making it easier for both to understand the reasons for an SMSF recommendation and how it will benefit the customer,” he noted.
Both average minimum asset balances being used as an establishment benchmark are considerably higher than the $200,000 threshold Rice Warner established in its study, released in late 2020, as the benefit level that makes SMSFs cost competitive with public offer superannuation funds.