Just over 12 months ago, in September 2013, we spoke to head of policy, technical and educational services at AMP SMSF, Peter Burgess, for a My SMSF just as he was transitioning from a small Australian Prudential Regulation Authority (APRA) fund into a self managed superannuation fund.
We caught up with Peter recently to find out how the transition went and what the whole experience taught him about SMSFs.
How has the switch worked out for you?
It has worked out well for me. Even though it was a relatively unusual transaction (i.e. converting from a small APRA fund to an SMSF), the conversion went pretty smoothly. For me the decision to convert my fund to SMSF was mainly driven by cost and a desire to have more control over corporate actions. I really enjoy the interaction I can now have with my advisers around things like corporate actions for example.
How has it performed?
It has been pretty strong. I’ve got a fair weighting to Australian equities so obviously it goes up and down with movements in the ASX but its been pretty good. It has outperformed the market since I made the transition.
Have you changed your investment strategy at all?
No. As a small APRA fund, I already had an investment strategy in place for my fund. As my circumstances had not materially changed since the strategy was first put in place, my adviser and I did not see any need to change the investment strategy when my fund was converted to an SMSF.
What are some of your holdings?
I have some blue-chip stocks, like BHP, the big four banks, Telstra, Coca Cola Amatil, AGL in there, but also some Sonic Health Care, Ansell and Platinum Asset Management.
Did you use a corporate or individual trustee structure?
I used a corporate trustee. Although it was more expensive to establish than an individual structure, the benefits of having a corporate trustee versus an individual trustee are very significant and it is definitely worth paying for.
Is there anything easier/harder about having an SMSF rather than a small APRA fund?
It’s harder in terms of having to devote more time to some compliance type activities such as making sure all the paperwork is in order. I also nominated my home address as the mailbox for my fund, which means I get more mail than before. Things like share-holding statements, dividend statements, annual general meeting notifications and corporate action notifications. The Cavendish SMSF administration service has certainly helped from an administration and compliance perspective. The dashboard is a great tool as it alerts me to upcoming compliance events and missing or incomplete documentation. For me the biggest change has been a mindset change. When my fund was a small APRA fund, it was still my fund but I was not the trustee of the fund so I could afford to be a little more relaxed about the administration and compliance issues. However, now that I am a director of the corporate trustee of my fund, I am legally responsible for ensuring everything gets done which means administration and compliance issues are now more front of mind for me.
Are you glad you made the switch?
Yes I am. For me an SMSF is a much more cost effective option compared to an small APRA fund and using a professional SMSF administrator has enabled me to minimise the time I need to devote to administration and compliance type activities. Having worked in the sector for 10 years or so, there were certainly some things that I learnt setting one up myself. Yes the extra mail and notifications I now receive can take a bit of time to sort through each week, but for me the benefits of converting to an SMSF certainly outweigh this inconvenience.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
