Cost and expertise concerns deterring SMSF trustees from advice
Investment Trends has found there is a “significant advice gap” in the number of self-managed superannuation funds using a financial adviser.
The research firm’s 20th Vanguard/Investment Trends Self-Managed Super Fund (SMSF) Report questioned over 1,540 SMSFs and found more than 25,000 SMSFs were created in 2024 which lifted total SMSF assets to more than $1 trillion.
Interestingly, the number of people who said they had set up their SMSF at the suggestion of a financial adviser had risen compared to 2023 and 2024.
However, out of the overall 638,000 SMSFs in the industry, only 155,000 of these are using a financial adviser. This leaves 483,000 SMSFs that lack an adviser relationship, up from 475,000 in 2024.
Concerns cited by those who are not using an adviser include believing they cost too much (29 per cent), lack of confidence in the adviser’s expertise (26 per cent), and a previous poor experience with advisers (24 per cent). A smaller volume said they had found it difficult to find an adviser or thought they were inaccessible.
While the number of unadvised SMSFs is large, pleasingly 34 per cent of them said they plan to seek financial advice in the future. Others are open to receiving digital advice via scaleable, low touch solutions.
The most common areas where trustees said they would like to be receiving advice, but currently aren’t already doing so, are inheritance and estate planning, reducing their tax obligations, and portfolio review.
Other options for paid advice that are utilised by SMSF trustees rather than a financial adviser are their SMSF administrator, accountant for tax advice, their auditor or accountant for investment advice.
“Although Australia’s SMSF sector is continuing to grow, the research for this year’s report clearly highlights that there are significant advice gaps for many individuals operating their own super fund,” said Renae Smith, chief of personal investor at Vanguard Australia.
“Only 24 per cent of SMSFs currently use a financial adviser, which is not ideal when you think of the many complexities associated with managing superannuation including keeping track of changes in rules and regulations, administration, taxes, choosing what to invest in, and then personal considerations such as retirement income needs and estate planning.”
AUTHOR
Laura Dew
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