October 2016 – The Hopkins Group

For the first time ever, the average age of members of newly established self managed superannuation funds (SMSFs) fell under 50, to 48.8 in December 2015 – down from 54 in 2010. This is consistent with the generational shift we are seeing with clients, with many starting to seek financial advice from a younger age.

Why are younger people opening SMSFs?

Generation X (those born roughly from the early/mid 1960s to mid 1970s), are the first generation to have entered the workforce since the introduction of the compulsory employer super contribution scheme in 1992. As a result of this, Gen Xers have been able to accumulate a steady rate of growth within their super balances, with the benefit of time.

With ASIC suggesting those considering opening an SMSF have a super balance of at least $200,000 to ensure cost effectiveness, the potential 26 years of compulsory contributions the above cohort have benefited from could see many of them with super balances at this level or higher.

In addition to this, the leaps and bounds made by technology in recent years have effectively lowered the cost of sustaining an SMSF, making this type of super fund more competitively priced than ever before.

What are the benefits of opening an SMSF?

Depending on a client’s specific situation, there may be a number of benefits of establishing an SMSF over continuing in the more traditional retail super products available in the marketplace.

These benefits may include:

Greater investment flexibility/control
SMSF holders are not limited by the same investment options provided by retail super funds – effectively, an SMSF member can invest in any asset, subject to legislation and an individual’s specific investment strategy.
Broader range of insurance products
SMSF members can select insurance products from a broader range of providers, enabling them the choice of a product best suited to their needs, rather than being limited to the insurance product of choice by provided by their current super fund.
Greater estate planning control
In a world where blended families have increasingly become the norm, an SMSF provides members more estate planning options to ensure beneficiaries are looked after.
Flexibility to take advantage of Government announced changes
When the Government announces changes to super rules, SMSFs are ideally positioned to jump on these changes as they occur.

Assuming an SMSF is appropriate for their needs, the earlier a client opens an SMSF, the longer they have to reap any potential rewards. For example, a client purchasing an investment property within their fund through a limited recourse borrowing arrangement, will have a longer period to hold the asset (and give it the chance to grow in value) with the option to sell it off in retirement in potentially a tax free environment.

With the continuing growth of professionalism in the industry, more and more financial planners are beginning to recognise the value of SMSFs over retail super funds for their clients with higher super balances. As the cost of holding an SMSF continues to decrease, the question for those in their early 30s becomes when, not if, will an SMSF become appropriate.

If you have any questions regarding SMSFs or superannuation advice in general, please do not hesitate to contact our office on 1300 726 082 and ask to speak with a financial planner today.

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Disclaimer: Michael Williams is an Authorised Representative and John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL: 326450.

General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

So you’ve reached the end of your tenancy, you’ve given appropriate notice to your property manager and it is time to move out of your rental property. What’s next?

At the start of your tenancy, you would have paid a bond as a form of security deposit, to cover the payment of any issues that may be identified at the end of your tenancy. Provided you’ve followed the rules, you should be on your way to receiving your bond in full. But how do we assess how you’ve maintained your rental property throughout your tenancy? It all comes down to the all-important condition report!

What is a condition report?

At the start of every tenancy, as soon as your bond has been paid, your property manager compiles a full report of the condition of the property you are moving into. This is known as the ‘condition report’ and it is an important document that protects both the tenant and the landlord – you want to make sure you’re moving into a property that is up to scratch, and a landlord wants to make sure their investment is being treated with respect and looked after accordingly.

At The Hopkins Group, the condition report is compiled complete with pictures as visual evidence. You should receive two copies of this report, so that you can review its contents and note any differences you observe in your own inspection of the property.

Make sure you take note of anything that your property manager may have missed – you don’t want to be held accountable for something at the end of your lease that you didn’t do. Once you have made any notes and signed to the accuracy of the report on both copies, you will return one copy to your property manager, and keep one for your own records.

How is the condition report used at the end of a tenancy?

When you are vacating the property, your property manager will use your approved condition report from the start of your tenancy as a basis of comparison to inspect your property. Just like when you first signed your lease, we will go through the property to make sure the property matches the condition noted in your signed condition report. We do take into consideration general wear and tear, as a result of everyday life, but our main concerns are that the property is left clean and in good repair for the next tenant.

While living in the property, it’s important to keep your property manager up to date with any maintenance or damage to the property, minimising the need for expensive repairs in between tenancies. Remember, if damage is not reported, you may be held accountable.

What do we mean by reasonably clean?

When discussing the cleanliness of the property, you might hear property managers use the term “reasonably clean” – but what does this mean? Reasonably clean is subjective, right? For example, while one person may not find it necessary to sugar soap the walls, there are others who wouldn’t leave without doing so. As a rule of thumb, while minor scuffs aren’t the end of the world in a rental, general cleanliness is important – when the property clearly has not been dusted or vacuumed, it becomes unreasonable.

To help you prepare your property for your final inspection, we’ve compiled a helpful hint list – so there’s no excuse for letting your rental fall into disarray!

Have any questions? Our property management team is here to help! Please contact us at any time if you have questions about your lease and obligations as a vacating tenant on 1300 726 082.

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Drop in average client age for SMSF setups