Are you considering managing your own super? Read this first.

Self Managed Super Funds (SMSFs) continue to be a major force in the superannuation industry and for many people they suit their needs well. But recent research has shown that SMSFs may not be appropriate for all current investees as the performance of SMSFs as a sector has been relatively low.

Industry Super Australia (ISA) research* released in February 2018 and reported in SuperReview is based on a review of tax office data. ISA concludes that a self-managed super fund (SMSF) may prove to be a mistake for the average consumer, unless they have relatively high balances.

ISA noted for that financial year SMSFs with assets over $2 million earned, on average, a healthy 4.3%, but those under $500,000 earned ‘shocking average returns’. These ranged from zero for funds with assets of $200,000-$500,000 to negative 16.7% for funds with assets of less than $50,000.

Over the five years to 2016 the pattern held true. APRA-regulated funds earned an average return of 7.4% and, within that category, industry funds earned an average 8.2%. Conversely, SMSFs with assets over $2 million earned on average 5.6%; $1-2 million earned on average 4.5%; $500,000 to $1 million on average 3.7%; and, for balances below $200,000, average returns dropped into the negatives. 

Anyone in an SMSF should regularly assess whether their investment is achieving their aims. And if it isn’t, consider switching to a super fund like Prime Super as it might be a good alternative. Or even consider investing some funds in Prime Super as part of your overall SMSF strategy.

There could be a number of reasons for this change in strategy away from an SMSF. These include performance objectives, desire for the insurance arrangements the pooled fund can negotiate or to access personalised financial advice.

Super funds sole reason for existing is to provide benefits to members upon retirement. While Prime Super charges fees, those fees enable access to expert advice from global investment advisers.

For example, Prime Super has commissioned Whitehelm Capital to provide strategic investment advice regarding the superannuation savings of its 115,000 members.  Whitehelm’s advisory team provides specialist advice to institutional investors seeking tailored analysis and recommendations on specific asset classes, asset allocation strategies and investment selection.

Their advice has contributed to Prime Super’s investment return success over the short and long-term as can be evidenced by recent research released by leading ratings agencies SuperRatings and Selecting Super.

More than 90 per cent of members are invested in the MySuper option which has delivered top quartile performance in SuperRatings’ February 2018 Fund Crediting Rate Survey (Balanced 60-76) over 1, 3, 5, and 7 years. The same investment option was ranked in the top 10 over three years by Selecting Super in their assessment of the Top 50 Workplace Super – MySuper/Default Investment options.

Members of Prime Super can also access a range of financial planning advice. Depending on the request and requirements the advice can be over the phone or a face to face meeting with a qualified financial planner. The initial consultation is at no additional cost for Prime Super members.

Prime Super also has insurance that members are provided with when they join. This insurance may also be cheaper than what is available through an SMSF as a super fund can negotiate premium rates for the whole membership, rather than an individual negotiating by themselves.

So if your total superannuation balance is invested in a SMSF maybe take a bit of time to consider a super fund like Prime Super as an alternative or even to compliment your SMSF. 

This article contains general information only and does not take account of your personal circumstances. You should obtain personal advice where appropriate. This article is current as at the date of publication and subject to change. Prime Super (ABN 60 562 335 823) is issued by Prime Super Pty Ltd (ABN 81 067 241 016, AFSL 219723). A Product Disclosure Statement is available from the issuer by calling 1800 675 839.

* “Updated: DIY super falls seriously short for balances under $2 million, new analysis reveals’ per http://www.industrysuperaustralia.com/media/media-releases/diy-super-falls-seriously-short-for-balances-under-2-million-new-analysis-reveals/  and http://www.industrysuperaustralia.com/publications/reports/ato-self-managed-superannuation-funds/