A new study1 by the SMSF Professionals’ Association of Australia (SPAA) and Macquarie Bank reveals that the profile of SMSF investors is dramatically changing, with 46% of recent investors under age 30 and one in five females still living at home with one or more parents.
The report compares ‘intending investors’ planning to start their own fund in the next three years, ‘recent investors’ who opened their fund in the last three years and ‘established investors’ who have a fund at least three years old.
It finds that SMSF investors overall tend to be more purposeful in their financial behaviour, constantly striving to benefit their families financially in the longer-term and more likely to save as much as they can.
Compared to other Australians, SMSF investors take a more active role in managing their investments and so have both greater advice needs than other investors as well as a higher propensity to seek out professional advice.
In particular, at least one in four intending investors loves experts and is fascinated by the opinions of others, but still makes their own decisions while managing their family’s future with professional support. This is consistent with last year’s study which found SMSF investors are generally more likely than other Australians to seek professional advice.
SMSF investors generally have a high level of contentment, with recent investors generally feeling excited, competent and knowledgeable in comparison to intending investors who feel energised, empowered and happy but struggle with juggling time, money and trying to live in the location of their choice.
The study reinforce last year’s findings that SMSFs are becoming increasingly attractive to a younger set of investors trying to build their long-term family wealth while managing the stress of young families, a time-poor lifestyle and an expensive housing market.
As younger investors take a longer term view to taking control and ownership of building their family’s financial future the average fund size is dropping, with intending investors having average super assets of $292,000 compared to $569,000 for established investors.
Recent findings by Rice Warner actuaries2 suggest that from a pure cost perspective, SMSFs need a total balance of $150,000 to match the most expensive retail funds, with funds needing at least $200,000 to become cost-competitive with retail and industry funds where the trustees take on some of the work load themselves. However, they also point out that costs are not the only consideration when making the decision to invest via an SMSF, with many SMSF investors choosing to achieve greater control and the ability to invest in assets like direct property.
If you would like to consult your own expert, please feel free arrange to a time with Michael Rees-Evans CFP® SSA ATI, Partner – Wealth Consulting.
Important note: this information is of a general nature and has been prepared without taking account of anyone’s financial situation, objectives or needs. Before making any investment decisions based on the contents you should obtain professional advice.
1. SMSF Active Management Report published by SPAA and Macquarie Bank based in July 2013 on research conducted in February 2013.
2. Costs of Operating SMSFs published by Rice Warner Actuaries in May 2013 for ASIC.