Three quarters of Self Managed Super Fund (SMSF) holders report being satisfied with their fund, with over 50% saying that having control and seeing strong performances are the main drivers of this positive view.

That is one of the key findings of the second annual SMSF Insights survey of over 600 SMSF holders jointly published by the Financial Services Council and UBS Asset Management.

The report identifies that instilling confidence is key for driving greater uptake and satisfaction. SMSF holders say the biggest barrier to setting up an SMSF was finding the confidence to manage their own retirement savings (30%). Similarly, the pressure of making their own investment decisions was seen as the most challenging aspect of running their SMSF (31%).

The ATO’s compliance and regulatory requirements were also seen as a barrier to setting up an SMSF (19%) and a challenging aspect of running the fund (26%).

The level of investment in deposits/cash increased from 67% in 2015 to 74% in 2016. Over half of fund holders (52%) used managed funds (similar to 2015) and there were noticeable increases in the level of investment in domestic (51%) and overseas equities (30%).

Use of Exchange Traded Funds (ETFs) increased from 20% to 24%, with diversification (54%, steady), low costs (50%, up from 44%) and access to international markets (41%, steady) seen as the main benefits.

A range of views exist on what is required for a comfortable retirement. Around half the sample (49%) felt that $1 million or more would be required for a comfortable retirement, while the other half felt they could live comfortably on less (average $1.17 million, median $800,000). Estimates of the SMSF balance needed before retiring were slightly lower, with an average estimated SMSF balance of $1 million and a median of $600,000. The average estimate for annual income was $97,000 and the median was $70,000.

One fifth (20%) felt their SMSF would definitely provide them with enough income for a comfortable retirement, while another 43% said it probably would. Only 10% said their SMSF definitely wouldn’t provide them with enough income and 17% said it probably wouldn’t.

The percentage of SMSF holders having formal agreements with financial advisers (down from 46% to 42%) shifted slightly towards those using accountants (up from 25% to 30%). The level of involvement with banks was constant at 11%. Accountants were also seen as the most trustworthy source of information to help with SMSF decision making (average trust score of 7.1 out of 10, compared with 6.1 for financial advisers).

Bryce Doherty, head of UBS Asset Management in Australia and New Zealand said: “Achieving greater control and choice of investments remains the key driver for setting up an SMSF – and a source of satisfaction among those who have made the switch.

“However, despite the ever increasing popularity of SMSFs, it is interesting to see that global asset classes are underrepresented in SMSF portfolios. There is a need for greater diversification amongst SMSFs. Fortunately, there are many products accessible to SMSFs, including ETFs, that deliver the control and flexibility that SMSF holders are seeking regarding product choice, as well as providing opportunities to diversify their portfolios.”

FSC CEO Sally Loane added: “It is good to see that SMSF investors are, in general, well engaged and satisfied with their retirement savings strategies.

“Also pleasing to see is the number of respondents having formal agreements with financial advisers (42%) and accountants (30%) in the management of their fund. This was not just limited to higher value funds, with 30% of those enlisting a professional financial adviser having less than $200,000 in their SMSF.”

ENDS

For further information please contact FSC Media Manager Mark Smith on 0434 566 764 or msmith@fsc.org.au. Alternatively, you can contact Shannon Turnbull, UBS Media Relations Australasia, on 0419 799 364 or shannon.turnbull@ubs.com.

About the Financial Services Council

The Financial Services Council represents Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The Council has over 100 members who are responsible for investing more than $2.7 trillion on behalf of 13 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the third largest pool of managed funds in the world. The Financial Services Council promotes best practice for the financial services industry by setting mandatory Standards for its members and providing Guidance Notes to assist in operational efficiency.

About UBS Asset Management

UBS Asset Management is a large scale asset manager with well diversified businesses across regions, capabilities and distribution channels. We offer investment capabilities and investment styles across all major traditional and alternative asset classes.

Invested assets totaled some CHF628 billion at 31 March 2016. Asset Management is a leading fund house in Europe, the largest mutual fund manager in Switzerland and one of the largest fund of hedge funds and real estate investment managers in the world.