Email Copy for Member Directed Investment Strategy

Headline: Did you know your SMSF can allow each Member to make their own Investments?

The Superannuation Laws now enable a self-managed super fund to have six members, this allows SMSF Trustees to bring in younger members to build a unique and long lasting Family Super Fund. We have even seen six member SMSFs with three generations in them from ages 15 to age 80. Now if the rules of a superannuation fund allow the Trustee of a SMSF, it may enable one or more members to create their own specific investment strategy. For members of different generations, this provides investment freedom and avoids the Trustee locking members into unproductive investment strategies for their age or retirement goals.

For example, the older members of a SMSF, Mum and Dad, may be taking pensions and investing in cash for security. This is not a good investment for younger members who, if the rules of the Fund allow, may create their own self-directed investment strategy. This may include borrowing for a residential property, investing in Bitcoin, ETFs, shares in Australia and overseas, as well as futures, options and other allowable investments - something that may not be appropriate for older members in the pension stage of the fund.

How does it work?

The SMSF investment solution that a Trustee may employ is known as a member directed investment strategy. The way it works is that the member will apply to the Trustee of the Fund for their own investment strategy. The Trustee then considers the request in a formal meeting and may then go about establishing a separate investment strategy for that member. It is very much like a WRAP account in a larger superannuation fund.

Practically all income and expenses relating to the member's investments and any borrowing are to be allocated to that member. A proportion of the Fund's general expenses will also be allocated to that member. Any insurances for the member will be set off against that member's account.

Is your Fund ready?

Member directed investment strategies are an exciting option which may be offered to members of your superannuation fund. There is a bit of work to do to add member directed investment strategies, including upgrading the rules of the Fund and building a member directed investment strategy, but once it is done it has the ability to really let members of the Fund map out and build their own retirement goals.  

If you would like to know more please contact us directly.