Self-managed super funds (SMSFs) are now firmly embedded in Australia’s superannuation system, attracting a wide range of individuals who prefer to control their retirement savings. But who exactly is drawn to running their own fund, and why?
SMSF Member Profiles
SMSF members are typically motivated to manage their own super investments. According to a report by CBA and the SMSF Association, they can be categorized into four types:
- The Controller: Likes to have a high degree of control over their fund and investment decisions, often seeking professional advice but confident in their own abilities.
- The Self-directed Investor: Less likely to seek professional advice, highly confident in their investment skills.
- The Coach Seeker: Actively manages their SMSF with professional guidance but doesn’t fully outsource.
- The Outsourcer: Prefers to outsource most of the administration and investment decisions to hired professionals.
Snapshot of SMSF Investors
SMSFs appeal to those who want to actively manage their retirement savings:
- High Balances: Median portfolio of $1.04 million vs $132,000 for non-SMSF investors.
- Active Monitoring: 52% monitor their portfolios at least weekly.
- Diversification: 58% are diversified compared to 43% of non-SMSF investors.
- Preference for Stable Returns: 40% prefer stable, reliable returns.
- Environmental Investments: 21% engaged in ESG investments recently.
- Professional Advice: 19% base decisions on professional advice vs 12% of non-SMSF investors.
- Independent Information Sources: More likely to use online broker websites and company annual reports.
Where Do SMSFs Invest?
Top five asset classes for SMSFs in 2021–22 were:
- Listed shares – 28%
- Cash and term deposits – 18%
- Unlisted trusts – 12%
- Non-residential real property – 10%
- Limited recourse borrowing arrangement (LRBA) – 7%
These categories account for 75% of all SMSF assets.
SMSF Vital Statistics
SMSFs hold 24% of Australia’s $3.85 trillion in super assets. Female participation is rising, with women now making up 47% of members, gradually closing the balance gap with men.
Most SMSFs (68%) have two members, typically older married couples. Despite the option to have up to six members, few funds have more than four.
The Bottom Line
SMSFs offer the freedom to manage super investments but come with significant costs and responsibilities. The growing trend of female participation and rising balances highlight the benefits of control and personal investment strategies.
This article references information from SuperGuide written by Barbara Drury.