SMSFs in need of advice in key areas

Self-managed superannuation fund (SMSF) members are experiencing a dearth in financial advice, with 315,000 reporting they had unmet advice needs this year, up from 275,000 last year, across a broad spectrum of issues.

SMSF pension strategies, inheritance and estate planning, and identifying undervalued assets were the areas in which they wanted to receive advice most, but currently weren’t, with the Vanguard/Investment Trends 2019 Self-Managed Super Fund Report finding that 80,000 SMSFs fell into each category.

Tax planning was also a pain point for SMSFs, with 75,000 wanting to receive advice in this area, while guidance on investment strategy/portfolio review, investing for regular income, offshore investing, and protecting assets and income against market falls was also sought.

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Considering the importance of these issues to running a strong SMSF, Investment Trends chief executive, Michael Blomfield, believed that “what they have unmet needs in is pretty troubling”.

At the same time, overall satisfaction with financial planners by the SMSFs that used them had declined to a seven-year low, dropping seven percentage points from last year to hit 74 per cent. It’s worth noting that this figure was still relatively high, and 37 per cent rated their planners as ‘very good’ overall and 42 per cent as ‘good’.

The decline in satisfaction was largely due to interrelated issues of the level of fees, clarity around fees and charges, and value for money. There was a drop in satisfaction of five percentage points from SMSFs using advisers for each of these areas.

According to Blomfield, this reflected that clients often found it difficult to work out what they were getting for their money from advisers, especially when they may want a specific service but planners required to get a more holistic view of the SMSF first.

“They [SMSFs] just aren’t finding the value proposition at a price that they think is worth it,” he added.

Other areas to record decreasing satisfaction were frequency of contact, online portals to monitor SMSFs, and investment selection. In contrast, advisers’ tax and technical expertise, accessibility when they were needed, and ability to explain investment concepts all saw slight increases in satisfaction.

From an adviser perspective, those surveyed expected administration and compliance to be the key service challenges amongst planners who expected their SMSF practice to decline over the next three years. Blomfield said this was a well-founded fear: “They think most things are going to become harder, and they’re probably right post-Royal Commission”.

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