Learning to let go, acting as a true adviser instead of prescribing investments, and working closely with accountants are among the keys to successfully winning and retaining self-managed super fund (SMSF) trustees as clients, according to a leading industry analyst.
Recep Peker, a senior analyst with Investment Trends, says financial planning firms that create a value proposition that positions them as coaches and mentors, and who have strong relationships with accounting firms, tend to succeed better at attracting SMSF trustees in the first place, and then at retaining them as clients.
The insight is timely, as financial planning firms apparently struggle to win and retain SMSF clients. Investment Trends research shows that in June 2010, firms reported that they generated about 27 per cent of their income from SMSFs.
“They were saying that by 2013, three years into the future, we expect this to be 38 per cent of our practice revenue,” Peker says.
“So you can see how bullish they were about SMSFs. In 2011 they lost ground. They were still saying they expect our revenue to grow, and they were saying we’re getting 24 per cent firm SMSFs and we expect it to be 36 per cent in three years’ time, and then they lost some ground in 2012 as well. It’s kind of stabilised in 2013.
“In 2013 they were getting only 22 per cent of their practice revenue from SMSFs, but back in 2010 they were saying they thought they’d get 38 per cent [in 2013]. So it just hasn’t materialised.”
Peker says firms were also asked about the biggest challenges they were facing in servicing SMSFs. Many nominated accountants as the biggest challenge, but when asked what the single biggest challenge was, it actually came down to compliance and legislative changes, including lower contribution caps.
“At a high level, planners will complain [about accountants], but the manage challenges come through compliance and legislation,” Peker says.
Investment Trends then compared firms that said they were finding it easy or very easy to attract and retain SMSF clients with firms that said they found it difficult or very difficult.
“They say clients see the value of good advice, they know they’ll get good advice from me, and they want control – they ask for it, and they want control of their assets, but they see the value of getting advice around this control. This is what those who find it easier say.
“If you look at those who are struggling, they’re saying clients are too self-directed. So one group has been able to turn control to their advantage as part of their value proposition; but for the other group, they see they’ve lose control over [their clients] – they have not been able to turn it to their advantage, and to them it’s actually holding them back.”
Where accountants come into the picture as a positive for financial planners is
“If you look at those who are struggling, they also say competition from accountants [is a reason], but if you look at those who do it easier, they’re the ones who are more likely to work within an accounting firm, or have relationships with several accounting firms, referral relationships.
“Those who are struggling are much more likely to be those that do not have any relationships or if they have, it’s with one firm.
“You’ve got to work with accountants.”
Peker says Investment Trends’ research has also revealed that the proportion of accounting practices that have at least one person practising as a financial planner will double in the next two years.
“So either they have to train accountants up in-house, or they’re going to get financial planners in,” Peker says.
“So there’s definitely an opportunity to work closer with accounting firms, and to get your foot in the door.”
