Using a Professional Service to Set Up Your SMSF: Pros and Cons

Self-Managed Super Funds (SMSFs) have become an increasingly popular way for Australians to take control of their retirement savings. With an SMSF, individuals have the ability to make investment decisions and manage their fund in a way that aligns with their long-term goals. However, setting up and managing an SMSF requires a considerable amount of time, effort, and expertise. That’s where professional services come in. In this article, we’ll explore the pros and cons of using a professional service to set up your SMSF.

What is an SMSF?

Before we dive into the pros and cons of using a professional service, let’s first clarify what an SMSF is. An SMSF is a type of superannuation fund where the members of the fund are also the trustees. This means that SMSF members have complete control over their fund’s investments and administration. SMSFs can have up to four members, and they are regulated by the Australian Taxation Office (ATO).

What is a professional SMSF service?

A professional SMSF service is a company that provides assistance with the setup and ongoing management of an SMSF. These services can include everything from initial setup and registration to investment strategy advice, administration, and compliance monitoring. Professional SMSF services can help individuals who may not have the time or expertise to manage their SMSF on their own, or who want to ensure that their fund is set up and managed in compliance with ATO regulations.

Pros of using a professional SMSF service

Expertise

Setting up and managing an SMSF requires a considerable amount of knowledge and expertise. Professional SMSF services have the experience and expertise to ensure that your SMSF setup is managed in compliance with all relevant laws and regulations. They can provide advice on investment strategies, compliance issues, and administrative tasks, which can help to ensure the long-term success of your fund.

Time-saving

Managing an SMSF can be a time-consuming task, particularly if you don’t have the necessary knowledge or experience. Professional SMSF services can take care of many of the administrative tasks involved in managing an SMSF, including paperwork, record-keeping, and compliance monitoring. This can free up your time to focus on other important aspects of your life, such as your career or family.

Access to technology

Professional SMSF services have access to advanced technology and software that can help to streamline the management of your SMSF. This can include online reporting and administration tools, which can make it easier to manage your fund’s investments and compliance requirements. By leveraging technology, professional SMSF services can help to ensure that your fund is managed efficiently and effectively.

Cost-effective

While there are fees associated with using a professional SMSF service, these fees are often more cost-effective than hiring an accountant or financial advisor to manage your SMSF. By using a professional SMSF service, you can benefit from the expertise and resources of a team of professionals at a lower cost than hiring an individual advisor.

Cons of using a professional SMSF service

Cost

While we mentioned cost as a pro of using a professional SMSF service, it can also be a con. Professional SMSF services charge fees for their services, which can add up over time. It’s important to carefully consider the fees associated with a professional SMSF service before making a decision.

Lack of control

One of the benefits of an SMSF is that members have complete control over their fund’s investments and administration. By using a professional SMSF service, you may be giving up some of that control to the service provider. While the service provider will act in your best interests, some individuals may feel uncomfortable with relinquishing control over their SMSF.

Limited personalization

Professional SMSF services work with a large number of clients, which means that they may not be able to provide highly personalized advice or attention. While they will work with you to develop an investment strategy that aligns with your goals and risk tolerance, the advice they provide may not be tailored specifically to your individual circumstances.

Trustworthiness

Not all professional SMSF services are created equal, and it’s important to carefully vet any service provider you are considering. You want to ensure that the provider you choose is trustworthy and has a proven track record of success. Additionally, some service providers may have conflicts of interest that could impact the advice they provide. For example, a provider that also offers investment products may be incentivized to recommend those products to clients, even if they are not the best option.

Conclusion

In conclusion, using a professional SMSF service to set up and manage your SMSF can be a great option for individuals who lack the time or expertise to manage their fund on their own. These services can provide access to expertise, technology, and cost-effective management solutions. However, it’s important to carefully consider the fees, lack of control, limited personalization, and trustworthiness of any service provider before making a decision. By doing your due diligence and carefully weighing the pros and cons, you can make an informed decision about whether a professional SMSF service is right for you.