April 2015 Issue 103

SMSF: DIY or Supported?

B2B Editor1 April 2015

SMSF: DIY or Supported?

Self Managed Superannuation Fund (SMSF). The title infers work and with leisure time so hard to come by these days it’s not uncommon to be wary of anything “self managed”.

When considering the responsibilities that are required to be an SMSF trustee, many people worry about the reporting obligations,financial statements, tax return and the audit involved. These are important but if trustees are getting bogged down in these aspects, they may not be making the most of other features in their fund. Some trustees will elect to use professionals for the bare minimum services just the end of year financial reports and audits. Generally referred to as a “DIY SMSF model” it can attract people because it appears low cost. But it may turn out to be a false economy if advantages are foregone or penalties incurred.

Although some people think they will enjoy the administration process it’s important to consider the extent of requirements. Documents need to be securely stored for up to 10 years. The SMSF must be run without breaching superannuation legislation otherwise trustees could wear ATO penalties. Watching the business news each night, reading company reports and communications is a minimum.To manage investments to last a life time, in accordance with a written investment strategy, DIY trustees need to make time to consider global economic factors and apply robust risk management to protect their portfolio. Importantly, they should be confident they could generate returns at least as high as professional investment managers and advisors.

There are also many providers offering a partial DIY SMSF model.This type of service is for people who don’t want the hassle of managing their fund and who may not be as confident to go at it alone. Some services are online only. Some providers are new entrants. To keep costs down, some providers send work to be completed overseas. You should check the experience, qualifications and IT security of the provider very carefully. Even delays due to poor procedures can cost members, for example tax refunds delayed due to late lodgement.

Dixon Advisory have always offered what we call a “Supported” SMSF administration and investment service. Given the growing work and knowledge required by trustees who use the DIY model, there is a growing preference for this type of service.

Trustees with Dixon Advisory want control of their superannuation but not the administrative burden. They realise their time is valuable and don’t want to spend it compiling and filing documents. They want to make the final call on investment decisions but value the guidance of experts. And they still want the option to invest directly and monitor their funds with a quality online system.

If you’d like to partner with highly qualified experts who value service as much as you do, call us today on 1300 264 485 for a private consultation – offered with one of our Canberra office directors

If you feel you have too great an exposure to a single asset class or would like to understand more about our diversification approach, please contact me on 1300 264 485.