1. 22nd Melbourne Money & Finance Conference 2017
Evolutionary Trends in the Australian Financial Sector Monday 10th and Tuesday 11th July 2017
Australian Centre for Financial Studies

2. Outlook for the SMSF Sector
SMSF Sector Overview
Challenges Ahead

3. SMSF Sector Overview

4. Outlook for the SMSF Sector
Key SMSF statistics
590,742 funds
1,120,177 members
$674.7 billion in assets
Average and median assets
Asset values
2014–15
Average assets per member
589,636
Median assets per member
354,882
Average assets per SMSF
1,111,732
Median assets per SMSF
631,077

5. Outlook for the SMSF Sector
SMSF sector growth has continued but has softened in recent years

6. Outlook for the SMSF Sector
SMSF demographic is trending older but

7. Outlook for the SMSF Sector

8. Challenges Ahead

9. Outlook for the SMSF Sector
Superannuation legislation changes
Increased complexity
Transfer balance cap and CGT relief
Increased need for advice and compliance assistance
Real time reporting
Lower contribution caps
$25k concessional/$100k non-concessional
Affects SMSF members in their mid-50s to mid 60s most.

10. Outlook for the SMSF Sector
Investment Allocation
SMSFs have performed well over the past decade
Should not allow from complacency
SMSFs should be considering increasing their portfolio diversification by increasing exposure to:
Different markets to reduce home bias.
Different market sectors to better harness the benefits of economic growth in new industries (e.g. greater exposure to technology companies not found on the ASX)
Different asset classes, especially fixed interest and bond investments.

11. Outlook for the SMSF Sector
Retirement Income
SMSFs have performed well in delivering retirement income to members – 94% of benefits paid from SMSFs are in the form of an income stream
Account based pensions preferred mechanism
Low take up of retirement income products that manage longevity risk and volatility in income.
Will new CIPR world challenge SMSFs in this space?
Is there a need for more sophistication?

12. Outlook for the SMSF Sector
Aging SMSF population
Two key issues:
Loss of capacity to be a trustee through cognitive decline
Death benefit disputes
ALRC addressed both issues in report “Elder Abuse - A National Legal Response”
Advice and education as critical as law reform

13. Outlook for the SMSF Sector
Financial advice
New education and ethical standards from 1 January 2019
Ongoing challenges advising trustees on:
Retirement advice/strategy
Pension management/strategy
New superannuation laws
Investment research and products