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A Changing of the Guard; SMSFs and Young Australians


Superannuation is an ever changing industry and now, more than ever, it’s essential that young Australians use their retirement fund in an efficient and considered manner.

More often than not, superannuation is something that people sign up to in their youth and then forget about until it’s too late. Typically, Gen X and Gen Y have their retirement savings stored in the first fund they signed up to with their first job. They might even have multiple accounts they’re yet to consolidate.

But times, they are a-changin’! Over the past 12 months, the share markets have proven extremely volatile, encouraging more Australians – particularly young Australians – to consider taking control over what assets their superannuation is invested in.

The latest data from the Australian Tax Office (ATO) shows that 43% of new Self Managed Superannuation Funds (SMSFs) are established by members younger than age 45.

So why the shift?

Easing the sting of fees

SMSFs have always provided greater control and flexibility to members, but fees have sometimes been a deterrent to people with balances lower than $200,000.

The increase in average fees is due to the average balance sitting at $1,050,000* with advisers and accountants using a fee structure at usually 1% of the balance. If you have less than $200,000 in your account, this can be a big chunk of your savings and the reason lots have shied from taking the plunge into the SMSF world. But while fees within SMSFs have increased in recent times, the set up costs have decreased – making it a more accessible option for investors.

As more Australians take an interest in what is required to run a successful superannuation fund, they are shopping around and demanding more cost efficient options to keep fees down. These days, SMSF administrators are coming to the party and providing cost effective SMSF options with set up costs sitting at around $799. With those kinds of figures, SMSFs are not as out of reach for Gen X and Gen Y as they once were.

*As of December 2015

Bricks and mortar

Traditionally, Australians have always considered bricks and mortar a ‘safer bet’ than the share market and as such, the desire to invest in property is another motive that is enticing people under 45 to move towards an SMSF.

Less than ten years after the global financial crisis (GFC), uncertain global markets continue to cause major concerns so it’s common to find people seeking investments that they can touch and feel. The projected population growth in Australia’s major metropolises has also increased the demand for housing – a trend that investors can capitalise on.

With interest rates at record lows and real estate still producing fairly positive returns, Australians in their late 20s-40s are looking to move their retirement funds into bricks and mortar – something they can do through their SMSF.

Keeping a finger on the pulse

Finally, visibility and trust within a superannuation fund has become much more important to younger Australians. In the wake of the GFC, many were shocked when they received their superannuation statements or spoke to their adviser to realise the average fund balance had fallen by more than 17%.

Within an SMSF, people feel they have more control and visibility on the investments they elect, rather than entrusting the direction of their balance to their fund’s administrators. This hands-on approach that’s encouraged in an SMSF ensures highs and lows won’t come as such a shock, and investors can feel more involved in the growth of their wealth.


If you are keen to explore your options within an SMSF, call 1300 726 082 to speak to one of our financial advisers. Our team of accountants can also help with the management of the fund and handle all the administration on your behalf, keeping everything in-house and centralised.


Stats taken from ‘SMSFs winning over younger Australians’, Financial Standard, 23 March 2016


Dislaimer: 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.

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