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A real-world benchmark for SMSF performance

Loneliness may well be the bane of the long-distance runner's lot, but isolation can be a major challenge for SMSF trustees to manage too.

 

 

While most SMSF trustees do not directly manage every administrative detail of their fund, by their very nature self-managed super funds are personalised, if not bespoke. So one of the underlying challenges of a self-managing super fund is knowing whether you are on track to be able to provide for a comfortable retirement.

Being able to benchmark your fund against a peer group is the disciplined way that most professional fund managers measure their success (or otherwise).

SMSFs can use publicly available data to benchmark their fund – picking a major industry fund's MySuper offer, or the diversified investment options that managers like Vanguard offer retail investors, provides a high-level comparison point.

But that may not be an apples to apples comparison as institutional managers have easier access courtesy of their size to certain types of asset classes or investments – infrastructure or commercial property for example.

Which is what makes research released this week by the SMSF Association and Accurium a valuable resources for SMSF trustees.

Accurium is an actuarial business specialising in the SMSF sector and as a result has more than 65,000 SMSFs on its database paying a pension and therefore requiring an actuarial certificate which gives Accurium a deep set of real-world data on SMSFs.

For the financial year ended June 30 2016, the median account balance for a two-person SMSF increased slightly to $1,137,000. The median imputed investment return was a modest 1 per cent compared to an average over the past seven years of 5.2 per cent.

The 2015-16 tax year was a challenging year for certain investment markets – particularly markets that SMSFs traditionally have had heavier exposures – like Australian shares and cash.

The good news for SMSF trustees is that despite the weaker investment returns the Accurium analysis shows that the median balance for a 65-year-old SMSF couple still have an 80 percent chance of sustaining $70,000 a year lifestyle in retirement.

When you compare SMSF balances to the broader super industry SMSFs clearly have significantly higher balances and general household wealth. Which is just as well because according to ASFA's definition of a "comfortable retirement" the amount needed for a 65-year-old has increased by 17 percent from $702,000 to $824,000.

As a result Accurium says that despite the higher balances in SMSFs, more than half of SMSF retirees cannot be "reasonably confident" of achieving their desired lifestyle in retirement.

One in four (25 per cent) according to Accurium are actually unlikely – less than 50 per cent chance – of achieving their retirement goals.

With the outlook for returns being lower for longer, the Accurium research provides a timely reality check for many SMSF trustees that while balances are healthy and rising slowly they may well need to contribute more into super in order to be confident of enjoying that retirement lifestyle they aspire to.

 

Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
19 September 2017
vanguardinvestments.com.au


Sam El Shammaa

Sam El Shammaa

Director/Financial Planner

For more than 20 years, Sam has been a financial planner helping individuals and families achieve their financial planning goals, by providing advice on Investment Planning; Insurance Planning; Tax Planning; Retirement Planning; and Estate Planning. Working with a network of highly skilled professionals in Sydney he is dedicated to providing high-quality advice and integrated wealth management solutions that simplify and enhance the quality of his clients' lives.

Sam established his own firm in 1997 and has overseen its steady development and growth. Attention to detail, good listening skills and great empathy are symbols of his appreciation by his clients. He has built long-term relationships with his growing client base and aims to provide excellent customer service.

Sam began his financial planning career in 1993 after completing a Bachelor of Science degree in 1991. Since this time he has accumulated many professional qualifications such as:

Sam has volunteered with the Cancer Council of NSW and can be seen almost every year volunteering or participating in the 7 bridges walk.

Away from the business, he enjoys spending weekends with his son. He is also a football (soccer) tragic and is a massive Chelsea FC fan.



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George Pereira

Financial Planner

Having worked for national financial planning companies in the past, George has extensive experience in the provision of advice in risk insurance, investments and retirement planning and is focused on forming long-term relationships with his clients.

George has been awarded a Masters of Commerce (Financial Planning) and a Bachelor of Commerce through University of Western Sydney as well as having the Diploma of Financial Services (Financial Planning).


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Jane entered the financial services industry in 2006, and worked with big blue-chip financial companies such as Count Financial Limited and AMP Financial Planning Pty Ltd.

She holds a Master's degree in Applied Finance through Macquarie University, and she is a member of the Million Dollar Round Table.

Being a self-confessed "tennis nut", Jane spends many weeknights in the tennis court, and is a frequent member of Sydney's Eastern Suburbs Tennis Competition.

Being a highly motivated professional, Jane is always eager to help her clients on a wide range of financial planning needs.

Paul Jayashekar

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Financial Planner

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He provides a holistic approach on various aspects of financial advice encompassing areas such as Investment Planning; Insurance Planning; Tax Planning; Retirement Planning and has extensive experience and knowledge in these fields.

Paul's professional qualifications are:

Away from his professional life, he enjoys spending his time with his family doing various activities such as coaching his son and taking him to games. He is a very avid sports fan and a cricket enthusiast.

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Client Services Manager

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He holds a Master's degree in Commerce specialising in Marketing through the University of New South Wales.

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