Pension Management

Not for higher investment returns …istock_000008794467xsmallThere has been an above trend increase in the number of self managed super funds (“SMSF”) set up recently. Such spurts usually occur when investment returns have been poor. The expectation appears to be that better returns will be achieved with a self managed fund.However, there is no clear link between investment performance and super fund structure i.e. self managed, industry, corporate or retail public offer. While industry fund advertisements suggest otherwise, their claims relate to the relatively higher costs of the alternatives. Before costs and taxes, no structure has any inherent investment performance advantage.Five potential SMSF benefits …But a SMSF offers at least five potential benefits over other super structures: * Control If you want control, an SMSF structure is your best solution. You are the trustee of the fund and, as such, you manage the trust on behalf of the members (yourself). Within the bounds of the law, you make trustee decisions that take your personal circumstances into account. This can be important in matters such as estate planning. Imagine if you had managed your affairs to take advantage of the pre June 2007 $1 million contribution opportunity, only to die in July 2007. With any structure other than a SMSF, the third party trustee would in most cases transfer your funds out of the super environment. However, with a SMSF the trustee (usually your surviving spouse) could retain the benefits within the fund, allowing for a pension to be drawn offering potentially huge future tax savings. * Increased Choice and Flexibility Your ability to implement strategies and adapt to legislative changes is much greater with a SMSF. So is the choice of investment options available to you. These are potentially significant advantages. But for some, added choice and flexibility can result in procrastination. For others, it can lead to poor decisions because the pros and cons of alternatives are not well understood. Choice and flexibility are sometimes blessings and sometimes curses. * Better Tax Management With most (but not all) industry and public offer fund structures, your account is taxed on realised and unrealised earnings. But with a SMSF, only realised earnings are taxed. This means you have more money working for you. A smart investment strategy that defers unrealised capital gains until the pension phase can add up to an estimated 0.5% p.a. to your after tax investment returns. * Improved Cash Flow Management With transition to retirement pension strategies, you can contribute to and withdraw from super simultaneously. A SMSF allows you to manage this within one pooled account. Instead of selling assets in a pension account (to fund a pension withdrawal) and simultaneously buying assets in an accumulation account (to invest new contributions), the cash flows are able to be netted eliminating unnecessary transaction costs. * Investment Risk Management With most public offer and industry funds, when contributions are received they are immediately invested according to a previously nominated investment strategy. A SMSF allows the separation of the contribution strategy from the investment strategy, enhancing the flexibility of your investment risk management. A decision to make a large after-tax contribution now does not commit you to immediately investing those funds. The timing of any investment will be driven by your independently determined investment strategy.But not for everybody …While there are potential benefits of a SMSF, there are some downsides. There are the significant responsibilities and obligations you take on as trustee.And the costs of running an SMSF can be higher than other structures. Generally, we think it only makes sense to set up an SMSF if the projected super benefits are expected to exceed $1 million (in today’s dollars).While the Australian Tax Office recommends a minimum balance of $140,000, we think this only makes economic sense if your benefits are expected to grow substantially. Any decision should be heavily based on your expected future superannuation position, rather than where you are now.Ultimately, the decision to set up an SMSF is quite personal. A cost/benefit analysis is useful but may not be conclusive. Many of the perceived benefits are not easily measured in dollars and cents.One thing we do advocate is making an early decision. The earlier you choose the right structure, the more chance you have of maximising the benefits.

Asset management implies the management of a client’s investments by a financial services company that may usually be an investment bank. The way in which it works is that the company invests on behalf of its clients and gives them access to a wide range of traditional and alternative product offerings that may not be approachable to or affordable by an average investor.

As a rule, the expense of the service provided by the companies engaged in asset management in UK restricts it to high net-worth individuals, governments, corporations and financial intermediaries. The products that are generally included are equity, fixed income, real estate, agriculture and international investments.

When an individual deposits money into the account, it is placed into a money market fund. The fund, on the other hand, offers a greater return that can be found in regular savings and checking accounts. Now, the added benefit to individuals is that they can carry out all of their banking and investing activity at the same institution. They will not require having a bank and brokerage account at two different companies.

Thus, asset management in UK also includes the professional management of various securities like shares, bonds etc. and assets e.g. real estate to achieve desired investment goals for the benefit of the investors. Again, in this case, investors may be institutions like insurance companies, pension funds, corporations etc. Or it may be the private investors like both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds. Asset management UK is used every now and then to refer to the investment management of collective investments. It is also a fact that the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. With lots of asset management companies in the UK, it is easy to get necessary solution on this.

The method that a company or a specialised asset management firm uses to track all fixed assets such as equipment, chairs, tables, computers and technology and even buildings that are owned by a company or an individual is known as asset management in UK. Although the conception is not new, the method of using it for better revenue generation has caught up popularity very recently.

Among industry sector, the concept of asset management in UK is apparent only for a last few years. It is mainly because of the complicacies the finance industry is experiencing in recent times. The task of managing ones personal finance has become difficult. Needless to say managing assets will be even far more difficult.

Encompassing a lot of financial solutions, asset management also includes physical location of the assets and the methods which can be employed to manage these assets. Accounting for amortizations, depreciation values and future resale values of these assets are also part of this service. There are dedicated agencies that offer service on this. They offer this service to both individuals as well as businesses.

Making it easier to manage the assets and to ensure higher profit from assets owned by a company or an individual, asset management UK agencies look into ways of investing the assets of their clients for better returns. Collective investment schemes, pension funds, private banking and wealth management are some of the ways which they use to manage the assets more efficiently thereby to generate higher profit.

While carrying out the task of asset management, the agencies employ a number of processes. These are all designed to increase revenue generation of companies as well as individuals. Services in asset management UK include planning, procurement and accounting for daily operating costs through disposal. It also encompasses tracking physical location of these assets and accounting tasks such as amortization and depreciation. It also establishes contact with suppliers thereby making communication easy for their clients.