Suitable SMSF clients revealed

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SMSF figures for 2012 prove that they are not being oversold to unsuitable clients, says SPAA education and professional standards director Graeme Colley.

The number of new SMSFs is still increasing ­– 35,276 funds established this year – but by a lower percentage than previous years (26% for 2012 compared to 84% in 2011).

There were 994 SMSF wind-ups in 2012, which was a huge drop from 5108 in 2011.

Colley said the change in numbers, coupled with increases in average SMSF balances, dispelled the claim that SMSFs were being oversold.

“All the evidence suggests the right people are setting up SMSFs and, with the assistance of the appropriate professional specialists, are prudently managing their fund in a responsible way.”

The average age of people setting up new SMSFs has dropped from about 54 to 51, with 62% of new SMSF members being under the age of 55.

The average taxable income of SMSF members was higher than non-SMSF members, at $98,000 compared to $54,000.

This income gradually dropped from age 35 onward, with members of 65 years old having an average taxable income of about $68,000. They had the largest average balances at more than $822,000. Average balances have grown about 12% over the four years.

SMSFs seemed to be wrong for members with an asset balance less than $200,000 as the number of these members decreased, while members with a higher asset balance increased.

Colley concludes that “the ATO numbers show that the sector continues to perform and grow strongly in line with market expectations."

"While SMSFs are not suitable for everyone, there is growing evidence that suggests there is increased understanding of how they are to be used correctly.”

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