When high-net-worth individuals reach a certain wealth threshold, traditional superannuation options often become limiting rather than liberating. This case study demonstrates how Self-Managed Super Funds (SMSFs) can unlock significant value for the right client profile.
The Client Challenge
Recently, I was approached by an accountant representing a mutual client – a successful business owner with substantial assets both inside and outside superannuation. The accountant's concern was clear: "We need to encourage better use of superannuation strategies for tax efficiency and wealth building."
The client's situation was typical of many high-net-worth individuals:
- Significant wealth accumulated outside super
- Limited control over investment decisions in their current retail super fund
- Missing opportunities for tax optimisation
- Complex estate planning needs requiring flexible solutions
- Desire for transparency and direct involvement in investment decisions
The SMSF Solution
After comprehensive analysis, we recommended transitioning to a Self-Managed Super Fund. Here's why it made sense:
Investment Control & Flexibility
Unlike retail super funds with limited investment menus, the SMSF allowed our client to:
- Invest directly in ASX-listed shares under their own name
- Access international markets and diverse investment opportunities
- Consider direct property investment opportunities
- Implement sophisticated tax strategies around capital gains timing
Cost-Benefit Analysis
Traditional Super Costs: ~$2,500 annually
SMSF Management Costs: ~$4,500 annually (including administration and compliance)
Value Created:
- Tax optimisation strategies: $8,000-$15,000 annual savings
- Investment flexibility premium: $3,000-$8,000 potential uplift
- Estate planning benefits: Invaluable for family wealth transfer
- Net Annual Benefit: $9,000-$21,000
Implementation & Results
Our comprehensive SMSF service handled all complexity:
- Trust establishment and compliance setup
- Ongoing administration including tax returns and audit coordination
- Investment management with quarterly portfolio reviews
- Regular monitoring and proactive communication
- Professional tax planning throughout the year
The client gained complete investment transparency while we managed all regulatory obligations – the best of both worlds.
Personal Experience Validates the Strategy
Having operated my own SMSF for over 20 years, I understand firsthand the benefits and responsibilities involved. My SMSF has allowed me to invest in my office property, buy an investment property, diversify across different asset classes, and maintain complete control over investment timing and strategy. This personal experience helps me guide clients through the decision-making process with confidence.
Key Success Factors
This SMSF transition succeeded because:
- Sufficient Scale: With balances exceeding $500,000, the cost-benefit equation worked strongly in the client's favour
- Active Engagement: The client wanted involvement in investment decisions
- Professional Support: Our comprehensive service eliminated administrative burden
- Strategic Focus: Clear objectives around tax efficiency and estate planning
When SMSFs Make Sense
Based on 30 years in financial services, SMSFs work best for clients who:
- Have super balances over $500,000
- Want direct control over investment decisions
- Have complex family or business structures
- Seek tax optimisation opportunities
- Value transparency and flexibility
The Bigger Picture
This case reinforces why personalised financial advice matters. While SMSFs aren't suitable for everyone, for the right client profile, they can unlock significant value that generic super solutions simply cannot match.
At Morgans Mona Vale, we've built our reputation on delivering city-quality financial advice with a personal touch. Our SMSF solutions combine professional administration with the flexibility high-net-worth clients demand.
Got a question?
Here to help. Reach out. Contact Kylie today on [email protected] or 02 9998 4206.
