Alternative to an SMSF

QI’m a self-funded retiree always on the lookout for ways in which to invest my assets. I currently operate an SMSF with assets mainly spread across Australian equities but also in some managed funds.

I also have money in a “balanced” option industry super fund.

I’ve recently been made aware of managed discretionary accounts (MDAs), which may provide an investment alternative as my wife and I age and become less interested in, or capable of, managing a portfolio that requires ongoing, regular attention. I’d appreciate your thoughts on MDAs in terms of pros and cons and whether you think they’re an investment vehicle to consider for ageing retirees.

I know many readers will be interested in this issue, Mathew, but I have a personal interest as well. Having turned 65 last month and, like you, having a fair chunk of our super in an SMSF, Vicki and I have been pondering how to handle this as the years go by and our capability declines.

An MDA is, as you say, an interesting vehicle for those who want less day-to-day involvement but control over the broad strategy. While it may be a great option for you – and I encourage you to do more research – it is not the way we will go.

I agree that an SMSF needs time and expertise. Moving to an MDA could be an ideal middle step for you, but our view is to firstly simplify the assets inside our SMSF, then if and when we lose our capacity to run it we suspect we will either go for very low-cost indexed funds or consider a rollover to a large, low-cost super fund and shut down our SMSF.

Hopefully, we are both some time away from this, but having a plan will leave us both in a much better position.