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Trustee spotlight: Doug McPhillips uses his financial planning background to power his SMSF

For SMSF trustees, the idea is to use specialists such as accountants and actuaries to ensure the fund is compliant and meets its ongoing tax and admin obligations, play to their strengths and ensure it’s being run for the right reasons.



A former AMP employee, Doug McPhillips has a background in financial services and is a licensed financial planner.

“There were two reasons I set up my self-managed super fund (SMSF). I was starting to plan for my retirement. As a business owner, I wanted to make contributions from my income into my super fund to help reduce the tax I paid and build my savings,” he says.

Doug set up his fund in 1992 and it has generally invested in a diversified portfolio of assets over its 25-year history, including shares, property and cash, with a bias towards Australian investments.

“When I set up the fund I was looking for the assets in it to generate growth as well as income, with a preference for growth because I was producing enough income from my businesses,” he says.

With this in mind, Doug says it’s important for SMSF members to really understand their risk profile when developing an asset allocation strategy.

“When I started the fund I was prepared to take on more risk than I am now because I had time for the value of any assets in the fund to recover if share markets were volatile.”

“Now it's different because I'm in pension mode. I have just finished 10 years doing contract work and I'm retired. So a secure income stream is important to me,” he explains.

Doug says over the years he has learnt it’s important to have some exposure to overseas assets for their potential to generate growth and diversification benefits.

He also says it’s important to start an SMSF for the right reason, which is to produce retirement benefits.

“That helps to make the right decisions in terms of your investment strategy, being mindful of what you can contribute to the fund and the income it needs to generate. Do everything in accordance with the fund’s trust deed. And recognise you have the responsibility to make sure the fund complies with all the rules.”

According to Doug, it’s also important to take into account the effect of fees on the fund’s performance. It costs him about $4,000 a year to run his SMSF, which includes accounting and admin fees and auditing. But he says it’s important to really think about whether an SMSF is right for you.

“Ask yourself if it is really wise to have a self-managed super fund. I’ve had experience in finance and I've probably made just as many mistakes with my fund as somebody who hasn't had any experience.”

So far Doug has used a stockbroker to buy and sell shares and the cost of that also has to be factored into the fund’s performance. But he says it’s valuable to be able to talk through the factors that could affect the fund’s future performance with his broker.

Telstra is an example: it has been useful for Doug to talk through with his broker why the business is planning to cut its dividend and its future investment thesis, so he can decide how much exposure he wants to the stock and when to buy and sell shares. 

“If you're doing it yourself, you are the one that works out the fund’s weightings across asset classes. This is where managed funds have an advantage. You might pay more in fees, but the fund manager works out the weightings. They determine what to sell and buy and how long to hold assets. As an individual you have to depend on other people's advice, and you can still get it wrong. There’s a lot to consider in running your own self-managed super fund.”

Doug says the trustee’s level of involvement in the day-to-day management of the fund will depend on the individual. For some, outsourcing most of the fund’s functions will make sense, while others will prefer to be more involved in ongoing management. 

“I'm leaning towards relying more on experts, and it's taken a long time to recognise that,” he concedes. This is particularly the case when it comes to the fund’s international exposures. 

For SMSF trustees, the idea is to use specialists such as accountants and actuaries to ensure the fund is compliant and meets its ongoing tax and admin obligations, play to their strengths and ensure it’s being run for the right reasons.

Would you like to be featured in SMSF News as part of our SMSF Trustee Spotlight Series? 

As part of our ongoing SMSF Trustee Spotlight Series, we regularly interview and feature SMSF Trustees that are active on the SMSF Community.  

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