Self-managed super funds: Why you should consider switching

When it comes to your superannuation, it can pay off — quite literally — to increase the amount of control you have over your gains.

Every year, many Australians choose to switch their superannuation to a self-managed super fund (SMSF), but why is this investment style so popular? Should you consider switching to an SMSF this year?

Flexibility and self-reliance

If you are a small business owner, you probably consider yourself an independent person, capable of carving your own path in life and in your finances. Your super fund is no different. Westpac describes granting greater control, more investment diversity, lower costs, higher returns, increased flexibility, better estate planning and further access to funds as just a few of the benefits of using an SMSF. Today, the SMSF sector has grown into a $1 trillion+ market with more than 1.22 million members, reflecting its continued appeal among Australians seeking greater control.

Business development doesn’t have to be the only place where you have complete control.

The professional choice

Recent Roy Morgan research shows that satisfaction with superannuation has reached record highs, with all fund types improving in recent years.

While many Australians still choose to switch their super fund, there is growing awareness that doing so without the right advice can lead to costly mistakes — particularly as superannuation rules become more complex.

That is, except for those who switched to an SMSF.

SMSF members continue to report high satisfaction levels (around 80.4%), although industry and public sector funds have become far more competitive, narrowing the gap.

This doesn’t necessarily make SMSFs the obvious choice — instead, it reinforces the importance of making a considered decision. For many Australians, particularly small business owners, switching to an SMSF can offer greater control, but only when it’s supported by the right advice and a clear understanding of the responsibilities involved.

Today, switching without professional advice carries greater risk, particularly with the introduction of Division 296 tax on super balances over $3 million and the increased $2 million Transfer Balance Cap.

“The challenge is to ensure that people switching their superannuation realise they’d generally be better off getting advice and that they can feel confident in their advisor,” said Industry Communications Director of Roy Morgan Research, Norman Morris.

Where to start

Starting your own SMSF can be a major challenge, as there are many legislative and bureaucratic steps that you must be aware of and follow in order to ensure that you are adhering to the law as well as getting the most out of your SMSF. This now includes modern compliance requirements, such as digital identity verification through myID, and ensuring that reporting obligations align with systems like STP Phase 2, where relevant for business-operated structures.

If you think you are up to the challenge of taking full control of your investment, speak to Wilson Porter today to find out how you can use our superannuation services for both your personal finances and your business. Switching to an SMSF doesn’t have to be difficult; you just need the right advice.