Written by Kris Wrenn
Hub24 is a wrap investment and Super platform that Hudson have chosen to include on our Approved Product List. As well as a broad range of investment options (direct shares, Exchange Traded Funds, Listed Investment Companies and over 70 sustainable/ethical/impact options, they also have a SMSF services package aimed at younger, advised Australians looking to access the benefits of an SMSF. The services include fund set up, administration and audit. By leveraging and collaborating with Class and Nominfinity, Hub has been able to develop a lower cost and more efficient product.
This product helps younger clients access the benefits of a SMSF at an earlier stage in their working career, with a couple of guardrails. The investments are restricted to the HUB24 IDPS which allows further efficiencies. Furthermore it is an “adviser driven” platform so you need to engage an adviser and thereby heed their advice relating to investments.
What we are noticing is that younger people tend to be very engaged with their Super and have a particular interest in ESG (Environmental, Social and Governance) This new HUB24 product makes the SMSF environment available to them sooner than they would otherwise have access to it.
Hub charge an establishment fee of $538 for ASIC to establish a corporate trustee. ASIC corporate trustee Annual review fee is $59 p.a. and the ATO SMSF Supervisory levy is $259 p.a. The ATO requires two years payment for newly registered funds. All in all very cost effective and this cost effectiveness means that people can have lower balances than ever before and still make a SMSF viable.
You also have the ability to move out of the Hub platform and into property if and when that opportunity becomes possible. For me, land and property (be it residential or commercial) is the main reason to embark on a SMSF.
Key benefits of a SMSF – it’s household, its portable, its intergenerational.
- Investment choice
- Insurance flexibility
- Estate planning
- Pooled purchasing power
Barriers for entry
- Admin complexity
- Compliance obligations
- Balance requirements
- Multiple reporting systems
- Complex relationships
Traditionally clients remain in a non-SMSF environment until their balance and/or investment needs meet the traditional threshold to justify an SMSF. ASIC historically had a $500k balance guideline, which has now been removed. There has been a minimum balance required to justify establishing an SMSF, and in the past when you move your APRA regulated super fund into a SMSF environment it has triggered capital gains tax.
According to ASIC there may be circumstances where an SMSF with a low starting balance is consistent with the clients best interests. Research from Rice Warner found SMSFs with more than $200,000 of assets can be competitive with APRA regulated funds even where the Trustees outsource all administration functions, provided they use one of the cheaper suppliers.
There will also be circumstances when a SMSF with a starting balance is not in the client’s best interests because it does not meet the clients objectives, financial situation or needs.