A good financial adviser will remind you of what you know, help you to understand what you don’t know and walk you off the ledge when you feel like jumping.

Nobody will deny it’s been a turbulent year. As we put the franking credit debate behind us, coronavirus struck and the share market plunged 37 per cent. Dividends were cut, saving and term deposit rates at record lows, and income from investment properties also dropped due to rent relief and vacancies.

According to the 2020 Vanguard/Investment Trends SMSF investor report the SMSF market continues to grow, the impact of COVID-19 and subsequent macroeconomic uncertainty appears to have intensified the slowing rate of new SMSF’s.

SMSF’s currently sit at A$676 billion, a two-year low, and now represents one-quarter of the Australian superannuation industry. Nearly half of all SMSF Trustees are in pension phase.

Meaning liquidity is crucial to these Funds to be able to pay pensions as and when they fall due, and low yields and returns are of concern.

More trustees than ever are maintaining their existing fund, presumably to retain subsidized or lower cost in-force life risk insurances through their retail or industry Fund, and continue to direct their employer contributions to that Fund. Another reason may be as an “insurance” policy if they make a misstep with their SMSF?

Greater control over investments remains the main reason investors set up new SMSFs, however, control in unsettling times is important to existing Fund Trustees too. Being able to manage switches to different asset classes, controlling costs and whether withdrawals are from the full returns of the portfolio or part thereof, coupled with a modified spending strategy can assist superannuants live well and reduce the longevity risk to the Fund members.

The 2020 Vanguard/Investment Trends SMSF investor report also highlights that the main beneficiary of the current reallocation of assets have been Direct Property and Cash (illustrated below). Of course, this is not without concern. Certainly, cash and cash product seeing record low returns means that the unsuspecting Trustee/member may be consuming their capital, given that returns may not be meeting inflation. And, I won’t labour over the issues with Direct Property and the experience of some investors in that arena – Refer to our recent Insight here.

This month we are running a campaign on SMSF’s. Many people have a self-managed superannuation fund that they aren’t getting the most from. It may not be working hard enough for them and they’re left wondering if an SMSF is right after all. Their investments may be underwater. They may have rolled into an SMSF without any real goals or being clear on what to do to manage their retirement assets.

We help people decide if the SMSF is appropriate for them or if it’s time to wind-up the Fund. And provide the appropriate alternative superannuation solution tailored to the Fund members.

Are you trying to figure out what the next move is?

Focus on what you can control:

  • Create an investment plan to fit your needs and risk tolerance
  • Structure the portfolio along the dimensions of expected returns
  • Diversify globally
  • Manage expenses, turnover and taxes
  • Stay disciplined through market dips and swings; and ensure you meet your Trustee obligations.

Should you need assistance with any of the items listed above, an investment strategy review and pension strategy advice in these uncertain times, please contact us to arrange an appointment on 1300 026 800.


This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.


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