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SMSF Mate was created by 4 mates sick of the BS surrounding superannuation.
We simply wanted honest advice and better returns so we learnt how to do it ourselves.
SMSF Mates is a cumulation of a group of mates coming together over beers discussing their SMSF stories. We realised the information that underpinned our stories were not out there on a website to help people on their SMSF journey.
We wanted to create a site that would allow mates to gather information and allow them to have meaningful discussions with other mates whether they be advisers, friends, or family. We want our fellow Aussies to be more active in their SMSF’s.
Our hope is that SMSF mate becomes a trusted source of general information for present and future SMSF mates to be better informed and have a more meaningful SMSF journey.
At age 30 I went to a financial advisor to see what options I had for my super fund.
A reputable firm, managed by a reputable team yet pigeonholed into selling financial products the same as everyone else.
There are three main issues I had with this:
Let me paint a picture for you.
It’s a peaceful Sunday morning, you’re enjoying your morning coffee. All of a sudden you see a mass of people running past your front window! What would you do?
The average person would grab their running shoes and fly out the door to join in and start running with everyone else.
Few people will sit back and watch from the sidelines and ask themselves “where are they running to?”
What about when you drive past a restaurant with a huge line out the door? You assume it must be good because everyone else is there?
But it’s often a letdown.
This is exactly the same in almost all markets, and particularly in financial markets. Bitcoin is a fabulous example. Hoards of people bought into bitcoin. Did they understand what it was? Some did. Most didn’t. Those that knew had started the race years before, waiting patiently at the finish line.
I think we all know the end of the story for those that didn’t know what they were buying.
It is my belief that much of the face value of the stock market is due to uneducated ‘mums and dads’ investing their hard-earned money into the same products as everyone else. This results in a simple supply-demand issue and thus the value of stocks rise because more people want to buy them than they do sell them.
In April 2020, financial panic consumed the world and an enormous sell-off happened. Yes there is plenty of very good explanations as to why this happened and yes many companies are likely to be affected in the short term BUT ask yourself
“Did the underlying long term business models of many of the companies on the stock market substantially change?”
I believe they didn’t. Humans will still be flying one day. We will still need banks in the future. We will still need oil for a while yet.
And for all those that will fail, a new era of businesses will replace them. “Zoom” was something the Jetsons did until recently.
So why did so many people dive for the exits?
Because everyone else did.
The smart ones didn’t join in the selling race, they waited until everyone else exhausted themselves and then enjoyed the bargains that presented themselves.
For any product, you have to understand who are the buyers, who are the sellers and what are their motivations.
Everyone is in it for themselves, right?
Now think about your typical financial advisor. Educated. University degree. License. Nice car. Nice watch. Annual membership fees. Networking Lunches. Golf membership. They’ll need an office to work from. A secretary would be nice. Software, a high-end computer, iPad, the list goes on.
Oh and he or she wants to earn a living as well. They want to get paid for their work. Seems fair to me.
Now, let’s add all that up. Who do you think pays for all that?
I urge you to ask your financial advisor “did they buy all of those nice things because they invested wisely?””
Or did they earn most of it from fees & sales commission?
Don’t get me wrong, I charge for my time, I run a business too but when it comes to financial products if your financial advisor is simply going to put your money into the same market as everyone else, at the same time, why not just do it yourself?
Assuming a $100,000 initial investment, adding $10,000 a year with a market increasing 6% per annum, without complicating it with inflation and taxation, you would have around $318,000 after 10 years if you DIY’d.
Add in a standard 3% management fee (or $3000/year in the first year) and this number drops to $252,000!
Click here for the full breakdown
It is therefore my opinion that unless I could find a financial advisor who themselves are wealthy, have demonstrated experience in delivering better than average returns or invests my money alongside theirs, then I am better off doing it myself.
Now, this is the big one for us Aussies that no financial advisor I have ever met has ever explained to me.
It’s probably the most important lesson of all.
I’m an Australian. I work in Australia, I earn Australian dollars, I have an Australian super fund, I pay tax in Australia and most importantly I want to live and spend money in Australia. To do that I need Aussie dollars.
This means all of my investments will start and end in Australian dollars.
Yet the major financial markets are not priced in AUD. They are priced in USD. Want to buy gold? It’s priced in USD. Want to buy Google shares? It’s priced in USD. Want to buy Oil? It’s priced in USD.
In January 2018 Google shares were priced at $1175usd/share.
On the same day (I picked Australia day!) the AUD/USD rate was 1 Aussie dollar to 0.80 American cents.
This means the price of Google shares in my Aussie dollars on Australia day was $1469 AUD/share.
Let’s say I bought 100 shares that day. 100 x $1469 = $146,900
Now fast forward to 19th March 2020 when everyone was cashing out their investments due to Covid.
Google shares were priced at $1096USD, they were down 7%. Would you have sold because of this headline?
On the same day, the AUD/USD rate was only 0.55 US cents to 1 Australian dollar!
This means my Google shares were now $1992 AUD/share! That’s a 35% profit in my actual money!
So what looked like a 7% negative return on Google shares ($1096/$1175) was actually a 35% profit ($1992/$1469) on my money and so I cashed out.
Did your advisor call you and say cash out? Does your advisor even price your returns in your currency? Or do they quote things like “The US market is up 52% over 10 years”? This is irrelevant if you are transacting in a different currency.
I find it astonishing that in almost all websites I can find that quote financial product, not one of them gives you the option to convert back to what that price is in my Aussie dollars. And that is what matters most to me.
I have 6 screens in front of me right now, 5 for the markets and one for my email.
I live in the world of markets. As I’m constantly investing on behalf of clients and myself, I see so many different investment options on the market.
I wanted to be part of creating a platform where SMSF investors could break down the investments that are out there in all the different areas us Quant guys look for.
Whilst some of these terms may not mean much to you, Data is everything and we wanted to create a platform that gave you more information to make better decisions.
This is a big one – lots of SMSF’s don’t perform very well.
We all know the saying not to put all our eggs in one basket, but I see many SMSF’s that only have a few baskets.
SMSF Mate is creating a platform where you can learn about all the different baskets.
My hope is that our fellow mates have a diverse range of baskets that if one basket falls that the others stay intact.
We don’t want our mates to have eggs on their faces.
At 25, I started my own accounting practice just as technology was changing the way we did our work around the world.
I am a firm believer that self-managed super funds are an excellent vehicle for retirement savings, and the driver of the vehicle is you; hence the term “self-managed”.
I believe this website will empower more SMSF trustees to take more control over their funds.
There are three key areas I have noticed that the industry has not collectively addressed in the last ten years, which are:
I’ll be the first one to point out the legislative and compliance requirements have increased dramatically over the last ten years; however, technology has also allowed the costs of the compliance to be reduced.
In recent years, technology has enabled us to innovate and improve the way we communicate with our colleagues around the world.
As a result, a lot of SMSF work is being completed using an outsourced or overseas service provider which is a cost-effective process to satisfy compliance obligations in Australia. Whilst I believe that the standard of work done here or overseas is very much comparable, it’s a great question to ask your accountant when you a comparing compliance costs for your fund.
Outsourcing may be the reason your accountant can complete your reporting requirements and provide ongoing advice at a competitive price. If you are not being provided with any ongoing advice, you should be asking if you are getting value for money.
Information is power, and it is essential to understand the landscape for service providers in the SMSF space to ensure you are getting the best value for money.
By addressing these three issues, you could save a significant amount of money every year.
I’ve spent 20 plus years in finance, some of that time in as a Financial Advisor. Yes, Gareth and I have had robust discussion about the functions, effectiveness and worth of a Advisors…
Yes, historically Financial Advisors have been about product distribution and selling stuff, for which they got paid. These days it is more professional, there are good advice businesses out there, doing things right and having a positive impact on their client’s financial lives. I also acknowledge that there are still bad ones out there (like every industry) and some are having really poor experiences and getting bad advice.
In my opinion, the most valuable aspect of a Finance Advisory relationship, is just that – the Relationship. A relationship with an experienced professional that understands your objectives, your challenges and your current financial position. The objective sounding board that can provide education, experiential advice, perspective and stewardship to your financial affairs. Technical expertise in finances, product understanding and access to markets are just the additional benefits (not the main), which aid implementation.
Due to the history of the industry, its participants and practices, people and the market at large have a negative perception (yes I’m stereotyping but I’m not too far off), of Financial Advisors and the industry. The problem – this prevents people from seeking out the help they need to improve or alleviate pressure from their financial lives. This includes successful people and those already with money, who think they don’t need a Financial Advisor or that they could do it better because they been financially successful in other parts of life (work, business).
I can’t quite remember the saying or who said it (as I’m sure many have), but it is the wisest people who seek help/advice from others and know that they don’t know what they don’t know…
Yes, there are those who may have the intellect to educate themselves on management of personal finances and investments to a professional advisers standard (everyone should, at least attain a basic level) and objectively apply (maybe not this part so much). However, is this the best use of their time, or are there more effective ways or more important things to be doing with that time (financially or otherwise, i.e living, spending time with family, enjoying the things money actually allows you to do).
And for my most controversial statement from someone who has spent time on both sides of the fence and who also has a SMSF; no SMSF should be self-managed! Expertise, access and intellect aside, perspective and objectiveness are invaluable benefits of not going it alone!
In a way, by being here and being part of the SMSF Mate community, you are not going it alone!
By the construct of a financial advice business, staff costs (circa 50%), licensing costs, compliance obligations and loss leading activities, it does cost to provide good financial advice. A new age advice business operating on a fee for service or independent basis needs to charge appropriately and like most things in life, you get what you pay for. A financial advice business needs to run as a business (not a charity) and a profitable one at that, in order to be able to remain in business and service to the community. The catch here is that although the market calls for independent fees for service, most are just not prepared or able to pay for it. Hence, the Advice Gap.
I was drawn to be involved with SMSF Mate as a way to share my historic experience, but also SMSF Mate’s ability to share general concepts and experiential perspectives of others, that can reach and help more people than any one financial advice business.
I hope that you enjoy SMSF Mate and that it has a positive impact on your financial life!
We hope you find this website useful, it took us many years of trial and error and many years of discussions with people in the finance industry to gain this knowledge so we hope our learnings can be of use to you too!
If you have any SMSF or Superannuation tips of your own, please contact us.
Cheers!
Gareth, Troy, Ashwin & Ben
Aussie Mates
