A new breed of SMSF trustee who is open to an advice relationship is emerging, according to the latest research report from nabtrade and the SMSF Association.
The report, the fifth in the annual series Intimate with Self-Managed Superannuation, found these trustees see SMSFs not so much as a do-it-yourself option but rather a help-me-do-it solution for superannuation savings.
The initial report, published in February 2011, recognised three types of SMSF trustee – controllers, coach-seekers and outsourcers.
The Association CEO/Managing Director Andrea Slattery says: “The early movers in SMSFs were the controllers, who largely took up SMSFs as a DIY alternative to the APRA fund sector in search of greater control and flexibility.
“While controllers continue to be the biggest drivers for SMSF establishment, coach-seekers and outsourcer trustees now present the biggest growth opportunity for financial advisors given their amenability to financial advice and recognition of the viability of the vehicle as an advised proposition.”
The report, prepared for nabtrade and the SMSF Association by Core Data, found controllers now comprise about 39 per cent of trustees, outsourcers stand at 15 per cent but the biggest segment is coach-seekers at 46 per cent.
Despite the ongoing growth of and awareness about SMSFs, Slattery says the report found there are still barriers to entry.
“Encouragingly for advisors, the research suggests the most common barriers to SMSF setups by non-trustees are not knowing enough about SMSFs (38.0 % vs. 35.3% in 2013), balance size not justifying an SMSF (32.3 % vs 33.7 %) and too much hassle (30.6% vs 28.8%).
“Notwithstanding these barriers, however, close to one in five (18.6 %) non-trustees with a lack of knowledge or other constraints around setting up an SMSF would consider establishing one if an accountant or financial planner could assist them in better understanding SMSFs.”
Australia’s ageing demographic continues to provide ripe pickings for those in the SMSF sector, the report found. Slattery says: “In the last two years, more than three in 10 (30.4%) advisors claim to have experienced at least a 40% increase in demand from 41-50 year olds looking to save for retirement through an SMSF, up from 23.8% in 2013.
“Overall, the large majority (72.1%) of advisors say that they have experienced an increase in demand for SMSF services from 41-50 year old clients, in line with previous years.”
nabtrade General Manager Nathan Walsh says one of the more interesting findings to emerge from the report was the recognition by trustees that knowledge is the key to success in running an SMSF.
“nabtrade is delighted to work with the SMSF Association on its valuable work of listening to and engaging with SMSF trustees. Providing the right tools and insights to ensure that SMSF trustees make the most of their retirement savings is what we do.”
Walsh notes that SMSF trustees continue to have much higher confidence in their ability to meet their goals than other investors, with more than 70% expecting to achieve an average income in retirement of nearly $90,000pa.
“SMSF trustees continue to look to make smart decisions, they do their research and seek out new opportunities. Over a third of SMSF trustees are looking to invest in international equities, more than double the number looking offshore in 2012. This is consistent with the recent launch of nabtrade’s market-leading international trading capability, which has seen a lot of interest from SMSFs. In addition, more than two thirds are looking to invest further in Australian equities, which is consistent with our experience; SMSF trustees are often too keen to buy the dips and show a contrarian approach to investing.”
