Ask Paul: Is it risky for my wife and I to be with the same super fund?


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Dear Paul,

My wife and I have been running a self-managed super fund for the past 12 years or so and have been satisfied with its performance.

But we are both now well into retirement and at the stage where we are just drawing down on the super and we no longer want to spend the effort of running the fund. Also, should one of us become incapable of running it, we would need to wind it up. 

ask paul clitheroe is it safe for my wife and i to be with the same super fund

So, we are going to wind up the SMSF and roll the balances into an industry fund. My wife already has a balance in Aware Super from when she worked.

Aware has performed well for her, so we are wondering if I should open an account with them.

Should I choose a different industry fund to achieve some diversification in our super and spread any risk? Or is such thinking irrelevant in that large industry funds are at no, or at least equal, risk of failing? 

As for diversification, can we each do this with our own member balances within the fund? I suppose the only variable might be performance but, as I say, we are really only drawing down the balances now and growth is less of a factor. - Dave

You and I are thinking along similar lines, Dave. Our SMSF has been great. We held some complex assets in it, such as private equity, and this has gone well for many decades.

But, like you, our SMSF fund is expensive to run and reasonably complex. So, as our private equity winds down we are also looking at a move to a large, low-cost super fund.

I was chuckling with a very risk-averse mate of mine about this recently. He was pondering splitting his super across a number of managers. Personally, I could 
not see the point.

The monster funds, such as Aware, AustralianSuper, Hostplus and so on, basically all hold the same mix of assets. I am just not convinced you get any real diversification.

Sure, you get a different manager, but if one of these monster funds fails, it won't be management, it will be a collapse in asset values ... and they all own pretty much the same type of assets in the same percentages.

Apart from a bit of cost and extra complexity in managing your super, I guess there is no harm in splitting it across several big funds, but I'm not sure you are achieving anything.

Personally, when we go down this path, we'll be putting it in one fund and keeping things simple.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
April Waldron
June 13, 2023 3.31am

I see HOSTPLUS have some deal to look after SMSF investments and compliance .I think it's a good fund .