Thinking of Moving Your Super? Why You Might Be Better Off Staying Put
It’s completely normal to feel a bit of pressure when it comes to your superannuation. Whether you’re approaching retirement, starting a new job, or simply looking to optimise your savings, you may have been presented with a recommendation to move your money into a managed account structure, such as a Separately Managed Account (SMA) or a Managed Discretionary Account (MDA).
As financial planners, our primary role is to help you build a clear path to your financial goals. We believe that your existing super fund often has excellent options that suit your personal goals and objectives. The decision to change should never be taken lightly or under pressure. Instead, it requires a strong consideration of key things.
Before you make any move, here are some points to think about.
Your Existing Super Fund: A Purpose-Built Investment
Your superannuation fund—whether it's an industry fund, a retail fund, a corporate fund, or a public sector fund, is a powerful, purpose-built investment vehicle designed for the long term. These funds benefit from scale, which allows them to offer:
Competitive Performance: Many funds have a proven track record of delivering strong, consistent returns over the long term, thanks to highly skilled investment teams and diversified portfolios.
Low Fees: Many funds, particularly industry and public sector funds, are known for their low fees, which can have a huge compounding effect on your retirement savings over decades.
Potential Retirement Bonuses: As you approach retirement, some super funds may offer a tax-saving "retirement bonus" when you transfer your super from the accumulation phase to a retirement income account. This is a benefit unique to certain funds and is a valuable incentive to be aware of before moving your money.
Simplicity: They provide straightforward investment options that are easy to understand and manage.
Understanding Managed Accounts: A Tool, Not a Goal
Both SMAs and MDAs are types of managed accounts that have become very popular with financial planners and wealth managers. While they have subtle differences, their core purpose is the same: to give a professional manager the authority to manage a portfolio of investments on your behalf.
Separately Managed Accounts (SMAs): An SMA is a type of managed investment product. You own the individual investments (like shares) within a professionally constructed portfolio, which is often based on a "model portfolio." The investment manager applies their changes to this model, and your personal account is updated automatically.
Managed Discretionary Accounts (MDAs): An MDA is a type of financial service. It is a more flexible arrangement where you give a financial planner (or their appointed manager) the discretion to make investment decisions within an agreed-upon strategy. This can be highly customised to your specific needs.
These structures might be suitable for you if you require a level of customisation and transparency that your existing fund cannot provide.
The Conversation That Matters: Your Life, Your Goals
Before discussing any product, a good financial planner will start by asking foundational questions:
When can you realistically retire?
What does your ideal retirement look like?
How much income do you need to achieve your goals?
What is your comfort level with risk?
These are the real planning questions. A great financial planner will use this information to build a comprehensive financial plan. Only then, once a clear strategy is in place, should a product recommendation be made.
If an financial planner is pushing a managed account without first understanding your life goals and showing you how it directly helps you achieve them, you should be asking questions.
The Questions You Must Ask
If you are considering a move from your existing super fund to a managed account, be sure to have an open and honest conversation with your adviser and ask these key questions:
What are the total fees (all-in) for the managed account, and how do they compare to my current super fund?
What specific benefits does the managed account provide that will help me achieve my goals? Does this outweigh any benefits I might lose by leaving my existing fund, such as a retirement bonus?
Can you show me a detailed performance report that compares the managed account's expected net returns to a relevant benchmark and to my current super fund’s long-term performance?
How will this move help me retire sooner or live a more comfortable life?
The decision to change your superannuation is a major one. It’s a decision about your future, and it should be made with confidence, not pressure. Always ensure you fully understand the reasons for the change and that the recommendation truly aligns with your best interests.
At Finspire Advisers, we provide holistic, goal-driven, Independent Financial Planning. No Commissions, No Hidden Fees, No Pressure.
General Advice Disclaimer:
This information is for general advice purposes only and does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Before acting on any advice, you should consider the Product Disclosure Statement or other relevant offer document. We recommend you obtain financial advice tailored to your personal circumstances before making any financial decisions.