276,000 SMSFs have unmet advice needs

Self-managed superannuation fund (SMSF) advice offers a huge opportunity for financial planners, with half of all SMSFs (or 276,000) reporting unmet advice needs that they are willing to pay to have served, according to Investment Trends.

The 2018 Vanguard/Investment Trends SMSF Report found that the largest area in which SMSF trustees wanted more advice was navigating tax and super strategies, with 136,000 SMSFs flagging this as a concern.

Investment selection also rated highly with 128,000 citing it as an unmet advice need, with 110,000 wanting assistance with post-retirement planning.

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Although the number of SMSFs with unmet advice needs had dropped by 1,000 from 2017, Investment Trends research director, Recep Peker, said that “they now have an even broader range of areas in which they need help than in previous years”.

Thirty per cent of SMSFs cited advisers costing too much as a barrier to seeking help with unmet advice needs, with 27 per cent saying a lack of confidence in advisers’ expertise dissuaded them and 19 per cent pointing to previous poor experience with advisers. Twenty-three per cent had no reason.

“There’s a lot of good news here for advisers,” Vanguard head of corporate affairs, Robin Bowerman said. “There’s a big and growing demand for advisers, they just need to work out how to deliver it with the appropriate level of expertise, cost and integrity.”

Furthermore, one in eight SMSFs said that they would be looking for a new adviser in the next 12 months. Of these, the top three qualities they would seek were expertise in SMSFs (46 per cent), honesty/integrity (42 per cent) and low fees/cost (38 per cent).

SMSFs were also increasingly turning to accountants to meet their needs.

The portion of SMSFs using financial planners had hovered consistently at around 210,000 since 2007, while the number of those not using an adviser grew from 130,000 in 2007 to 383,000 this year. In contrast, those using accountants rose from 245,000 to 350,000 over that time period.

Overall satisfaction with financial planners from SMSF clients was high at 81 per cent, suggesting that the low use of planners was not because those who used them were not happy with them.

Indeed, Peker said that part of the high satisfaction was because planners could spend more time with clients as the total number of people using planners came down. He also pointed to improvements in communication and technology as part of the satisfaction level.

Of those SMSFs with unmet advice needs, Investment Trends found that 26 per cent would turn only to a planner for those demands, 22 per cent would only look to an accountant, while 30 per cent were open to using either.

The number of accountants licenced to give financial advice to SMSF clients was also gradually growing. Nineteen per cent were able to currently, with that figure expected to increase to 33 per cent by 2021.

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I am of the opinion that there are also many more SMSF trustee's who have been 'dragooned' into this product, who remain blissfully unaware of the many and varied benefits of an SMSF. Theirs is to be used as a form of 'intravenous drip' of continuous fee's to nourish the adviser rather than themselves. The RC has shown some outstanding examples of this type of practice - although industry proponents would have already known this.

So I would venture that there is also another SMSF segment requiring advice. And that is the advice to exit the product in favour of something far more suitable!

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