SMSF bank account vs platform account

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Unicorn2020, 2nd Jun, 2020.

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  1. Unicorn2020

    Unicorn2020 Member

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    Hello everyone,

    Hubby and myself are looking to setup a SMSF. We are clear on the upfront costs and paperwork, no issues here. The question came up on the research of the account options.

    We are looking to put in a bit over 250K to begin with - salary sacrifices and roll overs from the AusSuper funds for both. We want to keep the investments very simple to begin with - VAS + VDHG or similar (the discussion is still going on) and some bonds or cash deposit but not much. So not many transactions are anticipated. We will also need an additional holding account some salary sacrifices roll overs from this FY to the next one.

    My idea was to go to ANZ and open two ANZ SMSF Cash Hub Accounts and get a separate account on SelfWealth to buy ETFs. However, upon reading this forum I have found that many people are using BT platform (never give a choice to a woman;)). I did a small research to figure out if we need it and still can't make my mind. It doesn't make sense to sign up when we can keep it simple. What am I missing?

    And yes, we have received accountant's advise. We will get another one if needed but to get the right information one needs to ask the right questions.

    Any constructive input will be much appreciated:)
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I would have obtained financial advice before an accountants advice. A SMSF is a financial product requiring licensed financial advice and accountants havent been able to discuss this for a while. Why would you want two cash accounts ? Makes no sense and this too : We will also need an additional holding account some salary sacrifices roll overs from this FY to the next one. BT will charge high fees (direct and indirect) and not save a cent at year end as the SMSF must account itself. And BTs accounting sucks. The only merits to selfwealth is a low (fixed) brokerage fee. The other SMSF costs will more than make up for this. $20 saving on a few trades wont save much to be honest.
     
  3. Unicorn2020

    Unicorn2020 Member

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  4. Unicorn2020

    Unicorn2020 Member

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    Two accounts - one operational and one for carry forward contributions. Example: I make full 25K concessional contribution this FY and also put 15K on a separate account for the next year but claim it as tax deduction this FY. I don't intend to work much the next FY and not expecting to get more than 10K in compulsory contributions from my employer, so quite safe here. Those 15K will push me to the lower tax bracket for this year.
    I'm not saying we need BT. Actually my question was about this: if SMSF is quite simple set and forget with just a couple of tweaks over a year does it make sense to have an operational deposit account with ANZ (or any other bank, we just have the rest of accounts both personal and business with them) and SelfWealth? I am aware of the other costs, not trying to save a penny. I need a simple system that works.
    Apologies for the post above, can't find how to remove it.
     
  5. Islay

    Islay Well-Known Member

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    As someone who has had and managed a SMSF for decades the first thing you need to be is very clear in your own mind is why you would choose SMSF. At the time it was the right thing for us because there were no real alternatives that made any financial sense. If we had our time over and funds such as AusSuper were available to us that is definitely what we have chosen.
     
  6. Unicorn2020

    Unicorn2020 Member

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    This is not what I have asked. I have no intention to discuss if we need it or not. The question was on accounts and the simplest way to set and operate the fund.
    Thank you for the input though.
     
  7. Islay

    Islay Well-Known Member

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    Sorry I have offended. I will offer no further input :)
     
  8. Unicorn2020

    Unicorn2020 Member

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    No offence taken:) I just don't want to go off topic.
    How did you organise yours? What products do you use if it is not a big secret? This would be more interesting.
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    This is not what carry forward contributions are. You are referring to reserving which may not even be necessary this year. Many taxpayers have up to a $50K concessional cap this year if they have a carry forward cap which can be checked in MyGov or by a tax agent. It negates reserving and the hassles that accompany it. TR 2010/1 doesnt specify that a second bank account is required or necessary for contributions to be received.Reserving is a issue concerning its subsequent allocation within 28 days.

    The fund will need to have a operating bank account. A fund should always have some liquidity of it could pose a s52 SISA concern for the investmnet strategy. That said, minimising liquidity may sometimes be desired as the rate of return may be 0% to low. But just because its 0% doesnt mean its a poor choice or best avoided. The fund needs to meets its obligations as and when they fall due.
     
  10. Unicorn2020

    Unicorn2020 Member

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    Hi Paul, yes you are right, I used the wrong wording here. Unfortunately for me 50K for the last and current FY won't be enough to do the trick of reducing tax with both of us being highly-paid individuals. What I want to do is "double dip" as described here for example Using the Contributions Holding Account for 30 June Tax Planning
    You are right about the second account, checked again and don't need it, just do the right transfers timeline and papers.
    I had a look at BT and think that we don't need all the bells and whistles as our investment strategy will be really simple. Maybe later when we have more time to look at the things at depth.
    Thank you for your input and patience.
     
  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Wraps and platforms are costly for SMSF as it duplicates costs. Wraps and platforms are very commonly used by financials advisers for their ease of reporting and admin. Another avoidable cost.

    Commsec offer no fancy reporting and data integrates with the mainstream smsf software like BGL simple fund and class (which can do all the paperwork !!). You can also add on Sharesight if its something for personal management (low cost) but its not sufficient for smsf annual reporting

    If the member involved has a carry fwd concessional cap the compliactions can be avoided. Check that first. And remember the double dip works ONCE this year. Not next year again.
     
  12. Unicorn2020

    Unicorn2020 Member

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    Hi Paul, thank you for all this information. BGL looks to me like a way to go. Still working out if we want to do it at all.
     
  13. pwnitat0r

    pwnitat0r Well-Known Member

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    Why would you setup a SMSF to invest in ETFs?

    If you’re struggling with opening accounts, how are you going to cope with detailing investment strategy, meeting minutes, compiling paperwork for financial reporting and tax return?

    You can get someone to do it all for you, but the more you outsource the more it costs.
     
  14. Unicorn2020

    Unicorn2020 Member

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    Why would you make a comment like that? I have never seen anyone born with this knowledge, that's first. And second, who told you I am struggling with anything? I put the information together. Please don't make the diminishing comments in my topics in the future.
     
  15. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Unicorn. The thought actually passed my mind that I agreed with that general view despite it being a bit harsh in tone. SMSFs are a complex beast and if someone struggles with the basic task of opening a bank account and trading etc then there could well be many aspects of a smsf that are overly complex. To establish a SMSF to trade and hold some limited ETFs may actually not be wise financial choice. When I compare the complexities of contributions reserving with the challenge of opening accounts etc I cant say I disagree with that comment. Remember too that contributions reserving only works once !!

    Considering a direct investment choice for each member may be a cost effective control alternative. But remember these funds employ a lot of investment professionals. If they cant see a calamity approach I will doubt a person removed from market sentiment will be ahead of the game.

    This is why a SMSF is a financial product. Careful consideration of many aspects of a smsf should be explored. Just wanting to have a SMSF doesnt make it a sound choice. One fundamental risk is that a spouse could mismanage BOTH members super. A SMSF assumes equality in decisions and sometimes it isnt. But should.
     
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  16. pwnitat0r

    pwnitat0r Well-Known Member

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    I made that comment because I don’t think the reasons outlined for setting up a SMSF are beneficial. You can achieve what you want using industry super funds and probably at a lower cost than the reporting and compliance costs on a SMSF with a $250k balance.

    I was not born with the knowledge on how to service my car and change the oil, or change my brake pads. Sure, I can gain the knowledge... but, for the sake of saving money and potentially risk a fatal crash from incorrectly changing the brake pads it’s probably not worth my time and effort to do so. I’d rather leave that to the mechanic....

    As someone who has a very simple SMSF with one cash account, two investments, minimal trades with buying only throughout the year and was able to collate all the documentation for the accountants and auditors, the time and costs billed to complete my SMSF return and financials was still over $3.5k. I could also prepare the financials to reduce the costs even further if I really wanted to.
     
    Last edited: 16th Jun, 2020
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  17. Superman__

    Superman__ Well-Known Member

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    You can have as many bank accounts as you like.

    Some people can get away with a single account that is used for everything, others need a couple. Just re-assess what you need on an ongoing basis.

    You don't need a separate bank account just to track contributions - that is an accounting function that happens 'on paper'. With 99% of SMSFs all members money is 'pooled' (combined and invested together).

    Personally, I use the Macquarie CMA for all the SMSFs we look after and advise on because it's solid and separate from most peoples personal accounts they have with the big 4. Interest rates abysmal on all bank accounts at the moment.

    If you want to use SelfWealth you will need at least two accounts anyway as they setup an ANZ account for all trading and fees.

    So basically an account like a Macquarie CMA would act as a the central hub and everything else (including SelfWealth) connects to that. Any competent SMSF provider can pull the data and automate the ongoing record keeping as much as possible.

    Get in touch with me if you want to know more.

    SM