New trustees prove sector is healthy

new smsf trustees

Individuals who are looking to become SMSF trustees are on average getting younger, which is a sign the sector is in a healthy state.

The reduction in the average age of individuals who are currently establishing SMSFs is a sign the sector is in good health, a leading education provider has said.

The observation was made at the recent launch of the “Class Annual Benchmark Report” for 2022, which revealed the average age of new trustees upon SMSF establishment has fallen from 51 between 2006 and 2014 to 46 between 2020 and 2022.

Further, the analysis found the cohort of individuals aged between 35 and 44 accounted for 30 per cent of all funds set up in 2022, making it the dominant demographic taking this action.

“The number I like to focus on as a sign of health is … how old people are when they set them up because we’re seeing at the moment [the average age of individuals establishing SMSFs falling]. So what that says to me is people are getting interested in SMSFs earlier in life. Now that’s got to be a good thing,” Heffron managing director Meg Heffron noted.

“That suggests that as an industry we’re making [SMSFs] more accessible. We’re bringing the costs down [and] we’re making them more attractive to people at a younger age.

“When you consider that eventually in a two-member fund, when both members die, probably that fund will be wound up, so there’s a guaranteed exit path, it’s nice to see the entry point getting younger.

“I think that speaks a lot to the health of the sector.”

Further, Heffron acknowledged the impressive level of financial diligence younger SMSF trustees are displaying.

“A lot of the younger people that we’re seeing coming along now, and people who come to us directly are quite young [in their] 20s and 30s, not even 40s and 50s, they’ve done their research,” she pointed out.

“They’re not remotely interested in someone telling them whether they should have an SMSF or not. They’ve actually already done their research and know exactly what they want.”

She said as long as these individuals had a high enough asset balance to make running an SMSF viable, it is likely they would be suitable to becoming trustees.

The “Class Annual Benchmark Report” for 2022 also found SMSFs had been resilient during the economic conditions that have challenged investment markets in the past few years.

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