The number of self-managed superannuation fund (SMSF) investors not using a financial planner is growing rapidly, particularly in relation to strategic advice, and advisers must change their mindsets if they hope to win back SMSF clients.
Matthew Johnson, managing director and chief executive of Wealthtrac, recently facilitated a lively debate on the sort of strategies advisers should adopt to engage and deliver value to SMSF clients within an ever-changing superannuation framework.
While it was generally agreed that most advisers understand SMSF trustees’ desire to be self-directed, they have not been able to articulate their value proposition to this audience.
Johnson said advisers should be promoting themselves as a “sounding board” to SMSF trustees, who are in danger of “throwing out the proverbial baby with the bath water”.
“Surely when investors are managing their own retirement funds they need advice more than ever before,” he said, adding that advisers might increasingly find opportunity with SMSF trustees who have taken on too much.
Bruising experience
The potentially onerous task of being an SMSF trustee was further illustrated by Andrew Meakin (right), executive director of dealer group Shartru Wealth.
“There are very few people who wake up in the morning and decide to create a self-managed super fund. They don’t say ‘I have nothing to do for the next four hours and I am going to spend it reading the Tax Act, the Estate Planning Act, the Superannuation Act and everything that Bill Shorten has to say’. There are very few of them,” he said.
Meakin believes advisers need to improve their skill sets and present themselves as far more than simply investment advisers to SMSF trustees, who often have good reason to mistrust investment experts.
“They’ve been poorly serviced, poorly invested or had some other bad experience,” he said. “So the challenge for advisers is to go up the skill curve.”
Statistics from December 2012 suggest SMSF trustees aren’t the best investment managers with 28.6 per cent of their portfolios in cash.
“They’re struggling somewhat to pull the trigger on their next investment,” said Meakin. “But this is just their first complication. So they got poor investment advice, now they have an SMSF… but many will encounter estate problems, structure problems, tax problems, audit problems. They’ve got statements appearing in the mail from the ATO.”
So while the decision to start an SMSF may be event-driven, the decision to seek advice on managing one might similarly require a few bruises along the way.
