SMSF Week 2020

Each year, the SMSF Association celebrates SMSF Week. Designed to educate and improve the financial literacy of those considering an SMSF for their retirement, throughout the week, we will provide educational resources and events to raise awareness and understanding of the SMSF sector amongst the wider Australian community.

Bringing the week to a close is our SMSF + Investor Expo, presented by SMSF Connect, for existing SMSF investors or those thinking about starting an SMSF. Featuring industry experts, educational sessions, and a range of SMSF and investment products and services, the Expo will be exploring a wide variety of topics all from the comfort and privacy of participants’ homes. 

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Key research: Cost of operating smsfs 2020

Proudly supported by

As the cornerstone of this year’s SMSF Week, the SMSF Association has retained Rice Warner to update its report prepared for the Australian Securities and Investments Commission (ASIC) in May 2013 ‘Cost of Operating SMSFs‘ in the context of ongoing public debate regarding the appropriate minimum size for a Self Managed Superannuation Fund (SMSF) and ASIC advice regarding fees paid by SMSF Trustees.

The research establishes the size at which a fund becomes viable and then assess implications for funds which are below this threshold.

The analysis for the 2013 report was based on the statutory costs and fee structures for SMSF service providers in comparison to the fee structures of APRA-regulated funds. The analyses were therefore based on potential fees. This analysis has been repeated.

For this report, Rice Warner has also been given access to anonymised expense, cash flow and balance information for approximately 100,000 SMSFs. This has allowed them to consider actual costs incurred.

Cost of Operating SMSFs 2020

Click below to get your copy of the updated research

Download the report

Resources

DID YOU MISS A WEBINAR?

Watch the complimentary webinars from SMSF Week 2020, below.

Webinars

SMSF Week 2020 launch

New research: Cost of operating SMSFs 2020

23 November 2020 - 11:00am (AEDT)

The cornerstone of this year’s SMSF Week will be the release of a key piece of research, proudly sponsored by SuperConcepts, answering one important question: When does an SMSF become cost-effective?

Join John Maroney, CEO of the SMSF Association, Michael Rice, Executive Director of Rice Warner and Kevin Sudlow, General Manager, Operations & Customer Service of SuperConcepts, to discuss key findings from the research report and a breakdown of the true costs of SMSFs.

Panellists:
John Maroney - CEO - SMSF Association
Michael Rice AO - Executive Director - Rice Warner
Alun Stevens - Senior Consultant - Rice Warner
Kevin Sudlow - General Manager, Operation & Customer Service - SuperConcepts

Why are SMSF and other retail investors missing out on ASX capital raisings during COVID-19?

25 November 2020 - 10:30am (AEDT)

On 31 March, by when the economic carnage inflicted by the pandemic was fully evident, ASIC and the ASX announced temporary emergency capital raising measures to help companies raise urgently needed capital, especially by allowing the 15 per cent placement capacity to be lifted to 25 per cent, a decision that disadvantaged existing SMSF and retail shareholders.

The panel will explore the implications of this relief that has advantaged large institutional investors and disadvantaged existing SMSF and retail shareholders.

Panellists
John Maroney - CEO - SMSF Association
James Kirby - Wealth Editor - The Australian
Brian Sheahan - Chairman - SAFFA
Geoff Wilson AO - Chairman & Chief Investment Officer - Wilson Asset Management


The true costs of operating SMSFs 2020: how to interpret and use the research

26 November 2020 - 4:00pm (AEDT)

In response to ongoing public debate about the appropriate minimum size for an SMSF, and ASIC advice regarding fees paid by SMSF Trustees, the SMSF Association has engaged Rice Warner to update its report on the costs of operating an SMSF prepared for ASIC in May 2013.

Join our panel of SMSF thought leaders as they identify key sections of the research report and explain how to use the fee comparison tables and research findings. Take away valuable insights into how you can use this updated research to provide the best outcome for your SMSF clients.

Panellists
Peter Burgess - Deputy CEO and Director of Policy & Education - SMSF Association
Aaron Dunn SSA - CEO and Co-founder - Smarter SMSF Pty Ltd
Neil Sparks FSSA - National Manager SMSF Strategy - BT Financial Group
Philip La Greca - Executive Manager - SMSF Technical & Strategic Solutions - SuperConcepts

SMSF + Investor Expo

26 - 27 November 2020
Presented by SMSF Connect

If you are managing your own super, thinking of doing so, or a self-directed investor, the SMSF + Investor Expo is an excellent opportunity to discover leading investment, advice and service providers to assist you in managing your wealth and achieving the lifestyle you desire in retirement.

IN THE NEWS

Financial Review

New research on the costs of self-managed superannuation and the Callaghan report’s spotlight on spiralling fees in the retirement system have caught the eye of younger investors, who are increasingly toying with the prospect of managing their own nest eggs.

The Morrison government’s 10-month retirement income review, chaired by Treasury veteran Mike Callaghan and released on November 20, did not shy away from tackling some of the financial services industry’s most sacred cows.

The SMSF Association (SMSFA) – a lobby group for investors and service providers in the $735 billion SMSF sector – issued its own modelling shortly after, which found the typical fund cost closer to $5000 to run.

The West Australian

A new report commissioned by the peak group for self managed superannuation advisers claims DIY savings schemes can be cheaper than industry and retail funds with balances as little as $100,000.

The report by actuaries Rice Warner challenges warnings about the viability of funds with balances of under $500,000. It claims funds with balances of $100,000 to $150,000 can be viable if DIYers use cheaper service providers or do some administrative work themselves.

SMSF Association Media Release

An SMSF Association survey of nearly 800 SMSF trustees finds individuals are motivated by far more than costs or investment returns when deciding to establish a self-managed super fund.

SMSF Association CEO John Maroney says: “The long-standing debate when comparing an APRA-regulated fund with an SMSF is typically restricted to a simple analysis of costs and returns,

“But the reality, as the SMSF Association’s new ‘Is an SMSF the right answer for you?’ 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 Australian

Self-managed super funds with balances of $200,000 or more are cost competitive with APRA-regulated funds, while at $500,000, SMSFs become the cheapest option, according to new research from Rice Warner.

In its first assessment of the competitiveness of self-directed super funds since 2013, Rice Warner also found that SMSFs with holdings of $250,000 could prove cheaper to run than industry and super funds if trustees undertake some of the administration or choose one of the cheaper admin services.

“In the seven years since the previous report, average costs of APRA regulated super funds have risen whereas SMSF costs have fallen,” Rice Warner executive director Michael Rice said.

The Australian

A golden era for industry super funds might be coming to an end as a series of key developments in superannuation shine light on improved prospects for Self Managed Super Funds.

The dispute over costs of both commencing and running an SMSF fund should finally be put to rest following a new report from the Rice Warner Group (commissioned by Self Managed Super Funds Association). The report says fees for funds with $200,000 or more are competitive with industry and retail funds, while SMSFs with more than $250,000 are the “cheapest alternative” provided the trustees undertake some of the administration.

The Inside Investor

Geoff Wilson of Wilson Asset Management fame and the Stock Brokers and Financial Advisers Association have joined with the SMSF Association in attempting to get fairer access for small investors in company capital raisings. ASIC is in their sights.

In a webinar organised by the SMSF body yesterday (November 25), coinciding with SMSF Week, Geoff Wilson, who is no stranger to battles waged on behalf of small investors, said: “We want a level playing field for retail investors. They’ve missed out during COVID. In fact, they’ve missed out since 1997 with a change to companies law… I’m a wholesale investor. [WAM] manages about $7.5 billion for 90,000 investors – mainly retail investors – and we get what I believe is an unfair advantage.”

Money Management

Individuals who have decided to set up their own self-managed super funds (SMSFs) are motivated by far more than costs or investment returns, with a desire for control over their own personal retirement income goals playing an important role in the process, according to the SMSF Association’s new “Is an SMSF the right answer for you?” survey.

The study, which surveyed of close to 800 SMSF trustees, showed that the key reasons why trustees chose an SMSF were control, flexible investment choices, dissatisfaction with their existing fund, and tax and estate planning which meant that individuals wanted to take control of their financial future.

SMSF Association Media Release

A research report by the actuarial firm Rice Warner offers clear guidance to existing and potential self-managed super fund (SMSF) members whether this form of superannuation could be cost-effective and the right retirement savings vehicle for them.

SMSF Association CEO John Maroney says the very important decision of choosing the right superannuation vehicle is one that should be guided by evidence and specialist advice, and this Rice Warner report, supported by the SMSF administrator SuperConcepts, certainly provides the data on which to base an informed decision.

“This research updates a report Rice Warner prepared for ASIC in 2013 and used to inform regulatory guidance. Additionally, for the first time, the research is based on actual data culled from about 100,000 SMSFs that provides valuable evidence to guide that advice and should be a key reference point for all interested parties.”

The Australian

Step back from two groundbreaking reports on superannuation over the last week and you discover that most ordinary Australians understand what they need in retirement. But the superannuation industry is simply not providing for those needs.

The shortcomings were underlined by the $35 billion exodus of superannuation funds when the government released the clamps.

The exception is self-managed funds where only token amounts were withdrawn. The Rice-Warner report into self-managed funds confirmed what everyone who runs a SMSF already knew — in most instances, self-managed funds are cheaper than public funds once invested amounts exceed $250,000.

Professional Planner

A new report from actuary Rice Warner says self-managed super funds with balances of $200,000 or more provide “equivalent value” to retail and industry funds, and balances with $500,000 or more are generally a “cheaper alternative” to APRA regulated funds.

Commissioned by the SMSF Association as an update to a report prepared for ASIC in May 2013, Costs of Operating SMSFs, the report aims to dispel what the group believes are lingering myths about the ongoing costs of running an SMSF and the appropriate size for an SMSF.

It also addresses market changes in SMSFs which the SMSF Association believe have dramatically altered the landscape.

Money Management

The cost of running self-managed superannuation funds (SMSFs) has become more competitive over the past seven years, because of the increasing cost of industry funds.

That is one of the bottom line findings of new research conducted for the SMSF Association by Rice Warner which found that reductions in fees for SMSFs and retail funds and the increase in fees for industry funds had changed the relative competitiveness of SMSFs in comparison to larger funds regulated by the Australian Prudential Regulation Authority (APRA).

The Rice Warner analysis said that it was also clear that fees considerably lower than those on pricing schedules were being charged to some SMSFs which meant that they were competitive even at small sizes.

The inside Advisor

SMSFs are not as expensive to operate as many, including ASIC and the Productivity Commission, have led us to believe, according to a report by consulting actuaries Rice Warner, and published to coincide with the start of ‘SMSF Week’.

The report was commissioned by the SMSF Association (SMSFA) which has been continually irked by both the Productivity Commission’s comments on SMSFs in a broader study of superannuation and the adoption of its conclusions by ASIC, as well as various commercial websites that service that market.

Rice Warner concluded that because costs of operating SMSFs have fallen, and costs to members incurred by APRA-regulated funds have risen, that the average SMSF with $200,000 was competitive with the larger funds, and SMSFs with more than $500,000 were significantly cheaper.

Financial Standard

New research suggests that self-managed super funds are giving retail and industry funds a run for their money in terms of fees and returns.

Joint research by the SMSF Association and Rice Warner found SMSFs with $200,000 or more are cost competitive with both industry and retail super funds. Balances of $500,000 or more are generally the cheapest alternative.

The research puts to rest the argument that SMSFs are not competitive on costs compared to APRA-regulated super funds, SMSFA chief executive John Maroney said.

The reduction in fees in SMSFs and retail funds while the increase in fees for industry funds since the inaugural 2013 report has changed the relative competitiveness of SMSFs in comparison to the APRA-regulated funds, he said.

Self Managed Super

Control over retirement income investments, rather than costs, has been identified as the chief reason most SMSFs are set up, 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.


Self Managed Super

The temporary emergency capital-raising relief measures implemented by the Australian Securities and Investments Commission (ASIC) and Australian Securities Exchange (ASX) to help companies during the COVID-19 pandemic severely disadvantaged SMSF and retail investors, the SMSF Association has said.

SMSF Association chief executive John Maroney said the relief, which came into effect at the end of March and helped companies raise urgently needed capital by allowing the 15 per cent placement capacity to be lifted to 25 per cent, had advantaged large institutional investors and penalised existing SMSF and retail shareholders.

“I think a lot of SMSF investors have potentially missed out. Based on the statistics at the end of last year, they have holdings of over $200 billion in ASX-listed companies and so if you’re missing out on potential for substantial raises there, if you’re suffering dilution, that is a significant impact on people’s savings,” Maroney said today during an SMSF Association webinar.

 

Self Managed Super

Heffron has welcomed SMSF running cost research that shows funds are far more cost-competitive than they are generally perceived to be, noting the only rising costs are those from regulators.

Heffron managing director Meg Heffron said the recent SMSF industry study from Rice Warner, commissioned by the SMSF Association and supported by SuperConcepts, had cleared up the common misconception SMSFs were always an expensive option compared to Australian Prudential Regulation Authority (APRA)-regulated funds.

Your Life Choices

Rice Warner report reveals the magic number that makes SMSFs a competitive option.

The federal government says self-managed superannuation funds (SMSFs) are too tricky for the layman. “There may be better options for your super savings,” the Australian Tax Office (ATO) says. “It’s best to see a qualified, licensed professional to help you decide.”

The Australian Securities and Investment Commission advises you to choose a financial adviser, despite the challenges being worked through in that industry.

Self Managed Super

A significant number of SMSFs considered uncompetitive on a cost basis typically with balances below $200,000 have historically grown to exceed this efficiency threshold in a very short period of time, new industry research has shown.

A Rice Warner study commissioned by the SMSF Association and supported by SuperConcepts found this to be the case when analysing 6000 funds with holding assets of between $100,000 and $200,000 in value at the beginning of 2017.

Rice Warner found by the end of 2017 its sample size had grown to 8000 funds, however, over the 12 months around 2000 had already grown beyond an asset balance of $200,000.

Self Managed Super

The latest industry research into the running costs of SMSFs has found funds with balances above $200,000 are as cost-effective as public offer funds and in some circumstances are the cheapest retirement savings vehicle available to Australians.

The study from actuarial firm Rice Warner and commissioned by the SMSF Association in conjunction with Super Concepts revealed SMSFs with balances of $200,000 or above are cost-competitive with Australian Prudential Regulation Authority (APRA)-regulated funds.

Further, the report showed SMSFs with balances of $500,000 and above are generally the cheapest superannuation fund option in the market.

SMSFAdviser

New research examining the costs of running an SMSF has questioned previous statements by ASIC that SMSFs with balances lower than $500,000 are generally uncompetitive with APRA-regulated funds.

In a new report, Costs of Operating SMSFs 2020, the SMSF Association and Rice Warner conducted research to determine the minimum cost-effective balance for SMSFs.

The report, sponsored by SuperConcepts, was designed to assist industry to compare estimates of fees for different SMSF balances and review the comparable costs of holding superannuation in an APRA-regulated super fund.

The analysis was based on the statutory costs and fee structures for SMSF service providers in comparison to the fee structures of APRA-regulated funds.

Self Managed Super

The SMSF Association has announced it will soon release a research report it commissioned actuarial firm Rice Warner to compile that will provide a detailed analysis of SMSF running costs.

According to Maroney, the report will deliver further information on the cost-effectiveness of SMSFs in comparison to other retirement savings structures and is particularly significant given ASIC’s guidance for individuals who have a superannuation balance of under $500,000 to be cautious about establishing an SMSF.

“The report’s conclusions, which also provide interesting insights about the investment performance of the SMSF sector compared with the APRA (Australian Prudential Regulation Authority)-regulated sector over the past 15 years, make for interesting reading, not just for the SMSF sector but for the entire superannuation industry,” he noted.

The Rice Warner report will be published on 23 November to coincide with the commencement of the industry body’s SMSF week initiative, now in its third year, which will run virtually and end on 27 November.

Super Review – Money Management

Rice Warner is to launch a report which will analyse when self-managed superannuation funds (SMSFs) are cost-effective compared with other options.

The SMSF Association said the report would also provide insights about the investment performance of the SMSF sector compared with the Australian Prudential Regulation Authority (APRA) regulated sector over the past 15 years, and would be launched during its SMSF week from 23 to 27 November.

AdviserVoice

The SMSF Association’s SMSF Week, to be held virtually from 23-27 November, will launch a ground-breaking report by the actuarial firm Rice Warner about the costs of running an SMSF.

The SMSF Association CEO John Maroney says: “In the face of ongoing public debate about the appropriate minimum size of an SMSF, and ASIC statements regarding costs incurred by SMSF trustees, the Association commissioned Rice Warner to update its 2013 report on the costs of operating an SMSF that was originally prepared for ASIC.

“Sponsored by SuperConcepts, this updated report analyses actual expense data for more than 100,000 SMSFs and provides invaluable insights about the actual costs of running an SMSF.

The Sydney Morning Herald

Eight out of 10 Self-Managed Super Fund (SMSF) trustees believe the cost of running their own fund represents good value for money.

An SMSF Association survey found that trustees responsible for their own superannuation are often so engaged with their fund that they are acutely aware that even a modest saving in expenses can prove substantial to the bottom line of a super account over its lifetime.

The “member experience survey” aims to determine the real experience in managing an SMSF and is part of a bigger association project exploring the various qualitative and quantitative reasons where an SMSF might be the right fit.

SMSFs are typically seen as being cost-effective when balances are larger and gain scale due to their ability to have a fixed-fee structure. However, just how cost-effective are they compared with their Australian Prudential Regulation Authority (APRA) regulated cousins?

About the SMSF Association

The SMSF Association is the leading authoritative voice for the self managed superannuation (SMSF) fund sector, established to improve the quality of advisors, the knowledge of trustees and the credibility and health of a vibrant SMSF community. The Association’s core beliefs embrace every Australian having the right to a good quality of life in retirement and having the right to control their own destiny.