Every SMSF is required to have an Investment Strategy that should provide guidelines for your investment process. It is best practice for it to contain your fund’s investment objectives, risk profile, asset allocation benchmark (or ranges) for your investments and allowable investment (asset) types. It should also address insurance for your fund’s assets and estate planning or who you would like your superannuation benefits paid to upon death.
Your fund’s investment objectives are usually determined by your income needs (particularly if in the retirement phase), capital growth needs (to reach a retirement dollar amount target or replace income drawdowns), liquidity requirements (to fund ongoing expenses) and the length of time the fund is expected to operate for (in accumulation and retirement). Your investment objectives should be reflected in your risk profile, asset allocation and current investment allocation.
We believe a risk profile should be the foundation of your investment strategy. It provides you with the basis to ensure that you are taking on an appropriate level of risk to meet your investment objectives. It also allows you to review where you may be chasing unrealistic returns and taking on unacceptable risk. You nominate a risk profile by choosing from our defined selection.
Your risk profile is matched with an asset allocation benchmark to ensure appropriate risk management through diversification of asset types. You can review your current asset allocation against our recommended benchmark for your Risk Profile and ensure it is suitable to meet your investment objectives. The recommended asset allocation for your risk profile gives a guide to long term return expectations and a range of outcomes in good years and bad.
Insurance and Estate Planning
A key consideration of your fund’s investment objectives should be to ensure that your assets are adequately protected in the case of an unforeseen event that will prevent your objectives from being met. This includes life insurance (in the event of an early or untimely death), total and permanent disability insurance and income protection insurance (for loss of income potential and unexpected expenses). It also extends to asset insurance such as for property or valuable items in the case of theft, damage, loss of income or liability claims. You need to review whether you have the appropriate cover in place within your fund on at least an annual basis. You also need to review your estate planning functions. Your SMSF is completely separate to your will and requires a discrete arrangement for the payment of death benefits to your beneficiaries. Our review will highlight if your fund may need to address appropriate estate planning needs.
Our report summarises each area of your SMSF’s investment strategy and highlight areas that might need attention. In some circumstances you may need to completely re-write your investment strategy to ensure it is compliant and in line with the investments the fund holds.
What does it cost?
We provide a once-off review of your SMSF’s investment strategy. The cost of an SMSF Check investment audit is $199 (inc GST). The fee should be tax deductible to your fund as an expense for administering/managing your affairs. However, we recommend that you seek your accountant or taxation adviser’s view on this deductibility before relying on this information.
The report will highlight areas that might require further action. You can provide this report to your adviser or seek further information on the specialist areas we have highlighted. Note: you should act immediately on calls of action if they mean that your SMSF is non-compliant to avoid penalties from the Australian Taxation Office (ATO).
Click here to register and get started on your SMSFCheck report.
The SMSFCheck Report was designed by co-founders Rebecca Sullivan and Darren Howlin.