Rethink SMSFs – Three myths busted

When you hear of self-managed super funds, you could be forgiven for thinking of high net worth individuals over 60 with a raft of accountants, tax agents and financial advisors in tow. Because in the past, that image would have been pretty accurate. But the rise of self-directed investors looking to take control of all their investments – superannuation included – has made SMSFs an appealing option for a much wider group of people. So is this new audience still shelling out on the same raft of advisors to deal with the complexity involved? Well, much like those perceptions around age, the number of SMSF administrators and what they can offer have also changed dramatically.

Plenty of historical ‘truths’ are now myths. Read below to learn more and uncover how seamless the SMSF experience can be. 

Myth #1: SMSFs are for the 60+

This assumption, as mentioned above, has been true historically – and indeed, the average age of an SMSF trustee is still 61. But this doesn’t tell the story of who is setting up SMSFs these days. 

According to the latest data from the Australian Taxation Office (ATO), the average age of SMSF establishment has been decreasing over the last 15 years, now sitting at just 46 years old. Additionally, in FY22 people between the ages of 35-44 accounted for 30% of all new establishments showing that younger people are increasingly taking the reins on managing their superannuation. 

AUSIEX backed this up last year, finding that 10% of all new SMSF accounts were opened by Millennials and that the number of Gen Z investors doing so doubled from the previous year. 

So while the average age of SMSF holders is still just over 60, this is largely a reflection of the past of SMSF. The present demonstrates an increasing trend of younger SMSFs members.

Myth #2: You need a balance of at least $200K

Many SMSFs have significant holdings, but this doesn't necessarily mean you need hundreds of thousands in your super balance to afford one. SMSFs have no minimum balance and, depending on the administrator, for a variety of super balances it may actually be more cost-effective to establish an SMSF.

Rather than a percentage of the total portfolio balance, most SMSFs have fixed annual fees. This means that, as your portfolio value increases, the relative size of the fee decreases. And if trustees pool their super, the fees become even more cost-effective: two members together (e.g. spouses) with the same super balance save the equivalent of 50% on fees. SMSFs can have up to six members, so the relative spend on fees can drop even further. 

Myth #3: SMSFs are complicated to set up and manage

For a long time, most SMSFs were set up by accountants or financial advisors. However, an increasing number of people are now turning to SMSF administrators (including Stake Super) for expertise and a streamlined approach to administrative support.

As opposed to dealing with an accountant, auditor and other administrative partners, SMSF administrators can offer full-service administrative support, significantly reducing the complexity, time and stress involved in setting up and running an SMSF. 

With Stake Super for example, SMSF administration is taken care of end-to-end. We establish your fund, manage ongoing administration, EOFY investment reports and annual statements (including independent audits), submit the fund’s tax return and more. Additionally, Stake’s integrated trading platform brings SMSF administration and investments seamlessly under one roof, so you don’t have to deal with multiple partners in investing your super. 

In conclusion, are SMSFs costly, complicated and for older investors? They can be, but they no longer have to be. The world of SMSFs is changing and whilst they are not appropriate for everyone, the barriers that existed in the past are certainly being broken down today. 

To learn about how we streamline SMSF setup, click here. 

This is not financial product advice, nor a recommendation that a self-managed super fund (‘SMSF’) may be suitable for you. Your personal circumstances have not been taken into account. SMSFs have different risks and features compared to traditional superannuation funds regulated by the Australian Prudential Regulation Authority (‘APRA’). Stake SMSF Pty Ltd, trading as Stake Super, is not licensed to provide financial product advice under the Corporations Act. This specifically applies to any financial products which are established if you instruct Stake Super to set up an SMSF. When you sign up to Stake Super, you are contracting with Stake SMSF Pty Ltd who will assist in the establishment and administration of an SMSF under a ‘no advice model’. You will also be referred to Stakeshop Pty Ltd to enable your trading account and bank account to be set up in order to use the Stake Website and/or App. For more information about SMSFs, see our SMSF Risks page.