Report: Cost of Operating SMSFs 2020

Earlier this month, the the SMSF Association released their research report on the ‘Cost of Operating SMSFs 2020’. No doubt the purpose of this was to provide guidance and insight regarding the cost-effectiveness of self-managed superannuation funds (SMSFs).

While everyone’s situation is unique, it does serve as a useful tool in deciding on whether an SMSF is right for you.

The research updates a report previously prepared by Rice Warner for ASIC in 2013. For this report, Rice Warner has also been given access to anonymised expense, cash flow and balance information for approximately 100,000 SMSFs. This has allowed them to consider actual costs incurred.

Some of the findings in relation to the range of costs for SMSFs are:

• Most SMSFs with low balances either grow to a competitive size or are closed.
• SMSFs with $100,000 – $150,000 are competitive with APRA regulated funds, provided the trustees use a lower cost service provider or elect to undertake some administration tasks themselves.
• SMSFs with $200,000 or more are competitive with both industry and retail funds, even when the SMSF has engaged a full service administration provider.
• SMSFs with balances of $500,000 or more are generally the cheapest alternative.

Be sure to do your own research and understand the limitations of this report in comparing the options relevant to you. In particular fee rebates or subsidies cannot be captured as part of the comparison with APRA regulated funds.

If you want to read the report, you can access it here on the SMSF Association website. Also, for any queries or to discuss your personal situation please contact me directly.