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Here are the steps BEFORE you set up an SMSF

One of the most important financial decisions is what to do with your hard earned superannuation and with 1.1 million Australians choosing a SMSF its certainly a buzz word for discussion for many particularly with the impact of covid during 2020 and 2021.

Before you set up an SMSF, Redwood would like to outline some of the key steps to understand whether an SMSF is suitable to meet your objectives and circumstances. The majority of our clients invest in property, so the selection of property is a key step in the process. We do not want you to rush into setting up an SMSF and our first discussion will provide you with detailed information on the risks and benefits of a SMSF and the process of setting up an SMSF.

Step 1: Financial Advice
When considering a SMSF, it is a financial product as defined by law and therefore we are required to provide financial advice. Redwood is licensed to provide financial advice on the establishment of a SMSF. This is a key process to determine what your investment strategy is and if the strategy is in your best interests. Financial advice will detail:

  • Investment strategy i.e. purchasing property
  • Borrowing and modelling of cash flow
  • Contribution strategy
  • Alternatives i.e. stay in your industry fund
  • Costs of running SMSF v current industry fund
  • Insurance recommendation
  • Estate planning

Note we will not be able to recommend an SMSF if you do not meet a minimum balance of $200,000. Financial advice will explore the reasons for establishing a SMSF and ensuring the investment strategy aligns with your short, medium and long term goals. We don’t believe an SMSF is right for everyone and will tell you upfront if we think an SMSF is not suitable.

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The majority of Redwood clients will establish a SMSF to buy property, usually involving a borrowing. We will guide you on what is a reasonable level of borrowing as well as a purchase price. We will detail the process and provide financial modelling on the net cash flow of the property until your planned retirement age.

SMSFs are regulated by the ATO and its important to have the time, skills, knowledge and experience to run an SMSF. Its important to understand that although Redwood will take care of the annual return, you will make the important decisions such as selection of property.

An important step is to assess if your insurance is adequate for your future protection. It is amazing how many Australians do not know if they have Death, TPD or Income Protection Insurance and what the insurance premiums are for any applicable coverage. We are required to recommend insurance to you even if you do not proceed. We all know insurance premiums are not cheap, however its important to protect yourself and your family for the future. We will review your current insurances in place and do a needs analysis to see if they should be maintained, altered, replaced or cancelled.

Financial advice is very detailed and our Statement of Advice (“SOA”) is around 80 pages to cover everything you need to consider before setting up an SMSF.

Once you have read the SOA, you will accept the recommendations and once signed, we can establish the SMSF on your behalf. Importantly, you cannot sign a property contract before the SMSF and Borrowing entities (if applicable) are established.


As Redwood are mortgage brokers and specialise in SMSF borrowing we will complete a borrowing assessment upfront to determine your level of borrowing.

We want you to use the right strategy at the right time, so if the SMSF is not suitable, we will generally make this clear in our initial discussion.

Step 2: Establish the SMSF and Borrowing Structure
Once the SOA is signed, we establish the SMSF and Borrowing entities. Only when they are established, a property contract can be signed. At this time, the rollover will be initiated from your industry fund to the SMSF – this generally takes two weeks and are received by EFT rather than a cheque.

Step 3: Implement your investment strategy
As your SMSF is established you will be able to implement your stated strategy. If this involves purchasing property, this will include signing a purchase contract, obtaining a loan if applicable. Its important to note that the deposit for the property must be paid from the SMSF and settlement should be at least 60 days from the date of the contract.

Disclaimer – The content has been prepared by Redwood Wealth Pty Ltd & Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only. Ivan Filipovic is an authorised representative of First Mutual (AFSL 423710). Redwood Wealth is a Corporate Authorised Representative of First Mutual (1244359)

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Ivan Filipovic

Ivan Filipovic is an experienced, independent Property, SMSF and Finance Expert and the founder of Redwood Advisory. Ivan has been educating and coaching investors for over 15 years and has built a successful property portfolio with a number of positive geared properties across Australia.  Ivan provides valuable and honest guidance by educating Australians on how to invest successfully protect yourself with knowledge, contact Ivan today for a complimentary consultation on 1300 790 110 or email ivan@redwoodadvisory.com.au

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