Advisers to self-managed super fund (SMSF) trustees must demonstrate independence in the advice and services they offer, and focus on value-added strategic advice rather than sales or transactions, according to new research.
The SMSF Professionals’ Association of Australia (SPAA)/Russell Investments Intimate With Self-Managed Super research, released yesterday, reveals a ongoing shift in SMSF trustee demographics, with greater numbers of younger people seeking to set up their own fund.
It says an increasing number of trustees are becoming “coachseekers”; and that if advisers can’t engage with trustees on trustees’ own terms then they run the risk of losing their business.
The research says that greatest demand for the establishment of new SMSFs is coming from people aged from 41 to 50. The next-greatest level of demand is among those aged 31 to 40.
“Four years in a row we’re seeing real movement,” says Andrea Slattery, chief executive officer of SPAA.
“You’re actually seeing quite a change in demographics – people are becoming more interested in their future at a younger age.”
Increasing demands
The research highlights the need for advisers to offer services that cater to the changing composition of the trustee market. It says trustees are increasingly demanding high levels of technical competence and professionalism, and that a significant risk to advisers in the SMSF sector is a lack of expertise and competence.
“If you aren’t expert at what you’re doing or you do not have competence, then this is a market that’s actually going to expose you,” the chief executive officer of SPAA, Andrea Slattery says.
The research has found that trustees are becoming more engaged with their superannuation, and that their level of knowledge and understanding is rising.
They are seeking advisers who charge on a fee-for-service basis; and younger trustees are increasingly seeking coachseeking services (coachseekers are defined as being those who would rather do things themselves, but need information, education and support in their decision-making.)
The main thing they look for in a professional adviser is investment expertise. A recommendation and a trusted service also rates highly. Recognised professional qualifications are highly sought after, but membership of a professional body is less highly valued. The “brand” that the adviser works under is not considered important.
A real risk
Slattery says that if advisers are unable to demonstrate high levels of competence and professionalism and can’t deliver a genuine value-added service, then “you’ve actually got a real risk”.
“You have to become experts, and competent at what you’re doing.
“Part of the results that came through are that you need to provide value-added strategic advice; you needed to have some networking opportunity to investment expertise if you didn’t have it yourself; and you needed to provide independent advice and services. Even if you’re aligned, you needed to be able to show the client that you’re independent in looking after their best interest, and that the client was the focus.
“It also came through that trustees are now looking for a recognised professional qualification, so attention to professionalism is really important.”
The SPAA/Russell research shows that the majority of advisers servicing trustees have not had to tell those clients that the Future of Financial Advice reforms will change the way they charge, because those advisers already charge in a FoFA-like way.
Professional Planner is an official media parter of the 2014 SPAA SMAF National Conference starting on February 19, and will be exclusively publishing the conference Daily News in print and online.
