The very success of the SMSF sector in recent years makes it a lucrative target that SMSF service providers simply cannot afford to ignore if they are to survive.
Darren Stevens, Director, Product Management & Strategy at Bravura Solutions, told delegates to the SMSF Association 2015 Technical Conferences that the sheer growth of the SMSF sector, which now had FUM of about $600 billion, inevitably meant competitors will enter this market aggressively.
“There are five trends occurring in the wealth management industry and these will all have an enormous impact on SMSFs.
“They are generational change, hyper-personalisation and customer-centricity, the Fintech revolution, cyber security and privacy, and SMACI (Social, Mobile Analytics, Cloud and the Internet of Things), and all are proving highly disruptive.
“They are transforming the provision of platforms, products, services and advice across the wealth management sector, and the SMSF sector will not be immune. Service providers that don’t adapt, and adapt quickly, run the risk of becoming irrelevant. As Bill Gates famously said, ‘banking is essential, banks are not’.”
SMSF Association CEO/Managing Director Andrea Slattery said Stevens’ warning about disruption to the SMSF sector was timely, but she was confident that SMSF specialists would be equal to the challenge.
“SMSFs are in themselves a disrupter, whether it be in terms of fees, returns or administration.
“It’s also a disruptor that is managed well, as highlighted by the Cooper Review in 2010, and is integral to the superannuation system as stated in the final report of the Financial System Inquiry. Both reports highlight that the SMSF sector has been able to adapt, and I see no reason why this shouldn’t remain the case.”
Stevens said there were myriad example of where these threats to SMSF advisors and service providers would emerge.
“Industry and retail funds are establishing their versions of ‘SMSFs’ to halt the hemorrhaging of their larger accounts to the SMSF sector. Although there are mixed reports to date on their success, there is no doubt they are a challenge to the SMSF sector.
“In a similar way retail and industry funds are putting together alliances with financial planning firms, another threat to the SMSF sector.
“Some providers are following the lead of ANZ that launched Money Manager to provide their customers with an account aggregation service that provides a holistic view of their finances.
“ANZ has also stolen the march with its use of technology, partnering with IBM’s artificial intelligence solution, Watson, to develop automated intelligence statements of advice, a trend that can only accelerate in the years ahead.
“All the banks are moving to simplify their superannuation offerings, reduce investment choices and support the MySuper regime. They have selected their target markets and are working on delivering a broader set of distribution channels.
“We are also seeing at least one social networking Robo-advice platform actively target the SMSF sector with a strong value proposition that assists self-directed investors to connect with their peers in a community of investors.”
Stevens said these challenges to SMSF providers could be met, and there would be opportunities to retain and expand their client base and grow profitably.
“But to do so they must cater for generational and social change and proactively employ technology to deliver more personalised and holistic offerings.”
Source: SMSF Association
