Many Australians are unhappy with the performance of their superannuation funds. Some of them are rightly asking why they are paying 1.5-2.5% per annum in investment management fees for sub-par performance.
They want more control over their financial future.
The popularity of self-managed super funds (SMSFs) has led to the perception that if you want control over your super, this is the only way to go. Certainly, if you want
- absolute control,
- want to buy direct property, or
- would like to hedge your risk or generate income with options
then an SMSF is the only choice.
However, if you just want control over your investments but not the responsibility for administration or compliance, then there is a compelling alternative for you to consider if you can make a few concessions about what you invest in.
Wrap accounts (also known as investor directed portfolio services) allow you to invest your super directly in local and international shares, ETFs, and thousands of managed funds, cash term deposits and even direct fixed interest. Working with an adviser (which is mandatory with these types of accounts), you get complete control over your investment strategy, asset allocation and investments, but free yourself from the burdens of fund setup, corporate trustees, tax returns, audits, keeping up with legislation, compliance obligations, etc. that are facts of life with self managed super.
Wrap accounts do introduce a layer of fees, but they are very competitive compared to the overheads of running an SMSF and they are often capped. If you want more control over your super without the administrative overhead (and direct property is not part of your strategy) a wrap account might be “just right”.