As much as 50 per cent of self-managed superannuation fund (SMSF) trustees are exposed to significant portfolio risk while 76 per cent say they do not use any tools to help them with portfolio construction, leaving considerable potential for strategic advice, according to an AMP Capital report.
The ‘Black Sky Report 2017’ showed just under half (48 per cent) of SMSF trustees said their goal was to have a fully diversified portfolio, yet more than 50 per cent of their portfolio was invested in just one investment type outside of managed funds, while 30 per cent had over half their portfolio invested in direct equities alone.
Based on quantitative online survey of SMSF conducted by Investment Trends, the survey showed 52 per cent of SMSF trustees described the relationship with their adviser as a ‘validator’
SMSF trustees needed assistance particularly around portfolio construction, understanding regulatory requirements, compliance, and taxation.
“And with 59 per cent saying there are areas where they would like to receive more financial advice, this provides further opportunities for advisers, either within their own business or through partnerships with other specialists,” the report said.
“So rather than focusing on specific recommendations, advisers re-framing their role through offering more investment guidance and technical assistance could be one way to engage with SMSF Trustees in the future.”
The survey also found 30 per cent of SMSF trustees found for their most recent managed fund investment from their financial planner. They continued to find this option attractive, with 47 per cent investing around $280,000 in them.
SMSF trustees also found fewer hurdles to investing in managed funds, with 2.9 hurdles to investing, down from 3.5 hurdles last year. Almost half (45 per cent) demanded managed funds for ease of diversification, while 41 per cent wanted access to out-of-reach investments, while 36 per cent wanted international diversification.
Meanwhile, 62 per cent of trustees with unmet advice needs would see a financial adviser, with 37 per cent demanding retirement strategy advice, 19 per cent wanting estate planning advice, and 28 per cent wanting investments advice.