SMSFs are very flexible and may provide access to many strategies and investments that traditional retail funds do not. However, to make the most of a SMSF, one needs current up- to-date member information to best inform strategic and investment decisions.

That's why maximising a SMSF can boil down to information management, and that's where investment wraps play an important role.

For example, one member may be able to start a pension but the other member may be too young. Up-to-date member balance information is needed to action this decision.

SMSF tax returns may not generally need to be lodged until the May following the end of the financial year, and processing is often scheduled with this date in mind rather than on a daily basis. This processing delay can mean that vital information is not current and can, therefore, hamper strategic decisions.

How an investment wrap can maximise SMSF management decisions

Investment wraps complete processing on a real time basis. When the SMSF buys or sells a share for example, the investment wrap reflects that decision within minutes. Dividends and distributions are banked directly, and generally the transaction is reflected in the investment wrap the same day. At all times, the up-to-date value of the portfolio is known, adjusted for all buys, sells, dividends, distributions and expenses. There is no waiting for the administrator to catch up.

With current information available via an investment wrap, better and more effective decisions regarding both investment and member - related strategy options can be made. With netwealth's family fee linking one could even run a separate investment account for each member can be established to stay abreast of each member's situation.

Running an investment wrap with a SMSF is not a substitute for proper accounting. The account balances at any time are not an audited balance and some adjustments can only be made at year's end. However, they give a very close approximation which should be of great assistance in helping trustees manage investment strategy, strategic asset allocation, buy/sell decisions and member related decisions.

And there's more...

Managing a SMSF using the netwealth investment wrap can also provide other advantages such as:

• Transactions can be downloaded to many popular accounting software packages obviating manual input and reducing costs ;
• Less manual input means fewer errors providing better compliance control and fewer potential Tax Office fines;
• Ensures seamless access and integration between the wrap and various investment markets;
• Offers discount brokerage when buying and selling Australian shares;
• Provides access to a range of international share markets at competitive brokerage rates; and
• Provides access to more than 200 managed fund products generally at wholesale prices.

Is there a downside to running an investment wrap with a SMSF?

Not really! Obviously there is an additional annual cost but this is very competitive. Generally, experience shows that the minor additional cost is more than offset by the advantages. The convenience and peace of mind of having more accurate and up-to-date on line information available 24/7 is also a huge benefit.

Is it difficult to attach an investment wrap to an SMSF?

No – it is very easy! The netwealth investment wrap can usually accept in-specie transfer of most assets from the SMSF and usually without creating any capital gains tax implications. On-going, the investment wrap is transparent for tax purposes. It passes all the tax and administration information back to the SMSF to deal with in its tax advantaged environment in the normal way.

In closing...

Investment wraps and SMSFs are indeed an ideal combination. The SMSF provides flexibility and control AND the investment wrap gives 24/7 access to accurate and up-to-date information making the most of what the SMSF has to offer.

Superannuation and investment decisions can be complex. We encourage you to seek assistance from a suitably qualified investment professional before making any final decisions.