SMSF trustees open to advice but uptake declines

Trustees of self-managed superannuation funds (SMSFs) are open to financial advice, but in the last year uptake has declined, according to research from Investment Trends. 

The ‘Vanguard/Investment Trends 2021 Self Managed Super Fund Report’ found COVID-19 uncertainty shifted attitudes towards financial advice, with more trustees willing to seek professional advice than before the pandemic.  

However, it had not translated into increased adoption of advice, as the number of SMSFs using financial planners continued to slide. 

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It comes at a pivotal time for SMSFs as SMSF advisers  lead the industry for loss of roles.

According to the Vanguard/Investment Trends research, overall satisfaction with financial planners had increased slightly since last year from a composite score of 69% to 71%, particularly when it came to tax advice or technical expertise.  

But the number of SMSFs using a financial planner had dropped from 185,000 in 2020 to 160,000 in 2021. 

This meant an increase of the number of SMSFs who did not have a planner but had unmet needs (220,000 to 245,000). 

The number of SMSFs who did not use a planner and did not have unmet advice needs dropped from 105,000 to 100,000. 

Irene Guiamatsia, Investment Trends head of research, said trustees were open to using an adviser because they were still not comfortable making decisions themselves or would like a second opinion. 

“We have just under 600,000 SMSF investors and among that group 160,000 are using an RG 146 adviser,” Guiamatsia said. 

“On top of that the 245,000 who don’t use an RG 146 adviser are maybe using an accountant or some other support system [but] if we compare 2020 to 2021, there’s been a decline in the uptake of advice. 

“It’s encouraging that SMSF trustees are increasingly open to receiving financial advice and the reason why things may be on the declining trend at the moment could be because the way they want to act – which is in a validation or a collaborative manner – might not quite be the way advice is delivered right now.” 

The pool of trustees currently advised were asked what advisers needed to deliver, with responses that included investment strategy, as well as help with pension strategies, inheritance, and estate planning. 

“The first thing that comes out is updates on rules and regulations and it has been in recent years that regulations have been changing nearly every day,” Guiamatsia said. 

“It’s not a surprise SMSF trustees want more education and information on what the various changes are.” 

Robin Bowerman, Vanguard head of corporate affairs, said: “Opportunities remain for advisers to demonstrate the value they can offer SMSFs, especially in areas such as SMSF pension and contribution strategies, as well as estate planning where there exists an advice gap”. 

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