Nothing but self-managed super?

By Jacquelene Pearson
I just realised it must be two years or more since I've been commissioned to write a superannuation article on anything other than self-managed super.
I used to be asked regularly to write about industry super funds, whether they were better than retail or wholesale offerings. Over the years I've written heaps of stories on super fees, super advice, how to select the right investment option, how to kick start, clean up and push forward your retirement savings.
Not recently, the only topic commissioning editors have been interested in for the past couple of years has been self-managed super.
According to SPAA, the SMSF sector's professional association, self-managed super is the fastest growing sector with $292.9 billion under management, "equating close to a third of Australia's $1.23 trillion superannuation industry."
Recent research indicates the sector is expected to continue its strong growth trajectory with one in 10 respondents in a recent survey who don't already run their own super fund indicating they intend to look at setting up an SMSF within the next two years.
Russell Investments managing director of intermediaries, Patricia Curtin calls these investors "coach-seekers". She says they make up 30% of the population but only one in five currently have an SMSF.
Wow! What a fantastic new market for all those intermediaries currently setting themselves up as SMSF specialists and experts.
The danger is that DIY super will be hijacked and turned into something very "off-the-shelf" unnecessarily expensive and providing far less autonomy and control to the trustee than it was ever designed to give. What a pitty that would be.
DIY purists usually don't have a financial planner, or if they do, it's been a strictly fee-for-service arrangement for a very long time. They have time on their hands and a high level of financial knowledge and investment experience. They take a daily interest in the markets and the management of their SMSF portfolio.
They may have help with the administration and compliance side of their fund's operations but they would very rarely abdicate power over investment selection and management to anyone, financial planner, platform operator etc. And they have high account balances, particularly in comparison with amounts held in industry super accounts, for example.
So as the SMSF sector winds up to cater for increasing demand for self-managed funds and as the big publishers write more and more stories about how popular the sector is, investors need to be increasingly wary. Be wary that it is really the right option for you. Be wary of any intermediary promising to make it easy and do your research before you decide to DIY.

THIS WEEK'S NEWS YOU CAN USE

What's been happening in consumer financial services in the past seven days? Here are some stories, events, items and issues you may not have noticed.

• Small super funds doing better than big: the Financial Standard reported that all super fund returns have recovered to an average of 6.6% for the year ending October 2010 but the big funds are still "failing to fire". How does your fund's return compare with the industry average? We're very removed from our super in Australia but it is worth keeping an eye on, at least quarterly and talking to your fund if you're not happy with the bottom line. It's also worth checking your employer is paying what they should and that you have adequate insurance.
• The Tax Office will take a look at 10,000 self-managed super funds: one area that seems to be bringing SMSF trustees undone is the offering of financial support to fund members and their relatives. Unless such arrangements can be proven to be loans they are deemed to be early access to your super, which is illegal unless provided under very strict circumstances. If you're an SMSF trustee make sure you have a regular look at the ATO website, it has excellent SMSF information.
• All eyes on Asia: according to a report from Cerulli Associates: global emerging market funds domiciled in Europe are set to double between now and 2014 as more institutional investors take advantage of the rapid economic expansion of the Asian region. Stay tuned for future Truepenny posts on how to build safe exposure to the Asian boom.
• Early victories for Climate Advocacy Fund: Australian Ethical's Climate Advocacy Fund has scored some early victories since its launch earlier this year. Two resource companies, Aquila and Paladin have agreed to greater disclosure around their carbon emissions as a result of lobbying from the new fund, along with the Climate Institute. Stay tuned for more information about the Climate Advocacy Fund and other responsible investment opportunities.
• Rates on hold? The Reserve Bank is expected to keep interest rates on hold at its December board meeting although more rate rises are expected early in 2011. This is the bank's last opportunity to adjust rates before its February board meeting. So at least mortgagees have two months of certainty.