No 'one-size-fits all' approach to retirement savings

No 'one-size-fits all' approach to retirement savings

SMSFs provide more flexibility in investment decisions

16 April, 2012 -The Self Managed Super Fund Professionals' Association (SPAA) says recent debate about superannuation funds being overweight equities reinforces the benefits of an SMSF in delivering flexibility for investors looking to best manage their asset allocation to align with their investment goals.

"The needs of investors may change over a person's lifetime. As trustees of the SMSF you must manage the assets of the fund, both in the accumulation phase and the retirement phase, appropriately for the members of the fund and the strategic allocation of their assets should reflect any differences," said SPAA CEO Andrea Slattery.

"There is no 'one size fits all' when it comes to saving for retirement so it is important that individuals have the flexibility to work out the optimal weighting for their portfolio and an SMSF is the only vehicle which gives the investor the autonomy and flexibility to decide when and how to adjust their asset allocations," Mrs Slattery said.

"The investment behaviour of individuals tends to change as they approach retirement and become more concerned about wealth preservation and seek more liquidity in their asset holdings. With an SMSF, as a trustee you have the choice of how you structure your asset allocation based on your personal circumstances and the retirement stage you are in. This allows you flexibility and the ability to control your investments based on lifecycle, risk, liquidity and other matters as required. Getting professional advice to assist you is the key," Mrs Slattery added.

SMSFs have outperformed broader superannuation savings vehicles in recent years as trustees adapted to the changing investment environment, and research shows that one of the key reasons for the superior performance of SMSFs is down to asset allocation[1].

"SMSFs cater to these changing requirements and allow individuals to change their asset weightings accordingly. SPAA's accredited SMSF Specialist Advisors (SSA) is the mark of trust that can assist trustees navigate the broad market and product offerings to assist in tailoring strategies to suit an individual's retirement goals," said Mrs Slattery.

"SMSF members are the most engaged in the superannuation industry and are keen to ensure that their funds operate and perform well. The recent research by SPAA and Russell Investments showed that the proportion of SMSF trustees who believe that equities are too volatile has doubled to one third (32%) this year, up from just 17%. With the added flexibility that the SMSF vehicle offers, they can easily adjust their holdings accordingly or decide to hold until a future time if they so wish," Mrs Slattery concluded.
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[1] "Asset Allocation for MySuper" - Rice Warner Actuaries, April 2012

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