Irene Guiamatsia

The number of self-managed superannuation funds with an adviser has remained steady, but the proportion of advised SMSFs has declined according to research from Investment Trends and Vanguard.

The 2022 SMSF Investor Report found the percentage of advised SMSFs has reduced to 29 per cent – its lowest level since 2019.

Investment Trends head of research Irene Guiamatsia says SMSFs are no exception to what’s happening to the overall advice sector level.

“Our latest financial advice figures show 1.8 million [advised] Australians and that’s down from 3 million,” she tells Professional Planner.

Cost was cited as the main barrier to seeking advice which was closely followed by “self-perceived confidence” in consumers managing their own financial affairs.

Guiamatsia says the ability for advisers to help their clients sleep easier at night is not emphasised to the degree it could be.

“You really need to buttress your value-add for people to go and pay $4,000 plus. You need to tell them you’re offering something substantial.”

Over 50 per cent of SMSF trustees found the hardest aspect of running an SMSF is keeping up with required administration and compliance, while 45 per cent cited succession planning.

“240,000 non-advised SMSFs with unmet advice needs tell us that the change in regulation is an area they’d like to get support,” Guiamatsia says.

According to figures from Wealth Data, the number of limited advisers who could specialise in SMSF advice has decreased 72 per cent since the start of 2019 from 2,901 to 781.

In April the advice movement researcher found the average amount of SMSFs an adviser administered was 21.39 which had increased to 34.73 by the end of 2021.

In that same time, net assets per adviser had more than doubled from $24.1 million per adviser to $48.5 million.

There are over 602,000 SMSFs and according to data from the end of the March quarter from APRA they hold a total of $892 billion in assets.

Getting started early

The average age and balance of newly established SMSFs has returned to around the level it was in 2005, with an average starting age of 46 and $340,000 in assets.

This is much lower than the peak of $500,000 in 2014 which at the time was viewed as the minimum needed for a SMSF to produce the equivalent value of an APRA-regulated fund.

However, this has since been debunked by Rice Warner and the University of Adelaide which found $200,000 in assets is the lowest threshold.

Guiamatsia said the youth shift is important to take note of because that cohort has the confidence to take control of their own retirements but that might not be a good thing.

“I give the example of the WebMD… everyone is an expert nowadays because they have internet searches. It highlights the need for more support because that sort of hubris can deliver unintended outcomes.”

Conservative investors

Despite “control” being the main reason SMSFs are established, 79 per cent defined themselves as “buy and hold” investors according to the data.

Consistent with previous data, SMSFs continue to allocate more than half of their portfolio to direct shares and cash, but the number of direct shares held increased with the age of the trustees.

Those 44 and under held a median of seven shares which increases to 13-14 for 45–64-year-olds and 19 to those over 65.

The SMSFs surveyed cited interest rates, inflation and market volatility as the top three factors likely to influence their decisions in the next 12 months.

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