SMSFs staying put due to regulation, volatility

13 April 2018

Growing concerns about the impact of regulation and ongoing market volatility on retirement plans means self-managed superannuation (SMSF) trustees are keeping an increasing amount of cash in reserves, AMP Capital said.

More than two-thirds of or 65 per cent of SMSF trustees of trustees are keeping cash in reserve due to global volatility concerns, AMP Capital research showed, while an average of $110,000 in cash per SMSF is being held that would otherwise be invested in growth assets.

Also, 70 per cent of SMSF trustees said they are concerned about ongoing regulatory reforms to super with 47 per cent of trustees planning to seek advice on how to navigate through the changes, the research showed.

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AMP Capital global head of marketing, digital, innovation and direct, Tim Keegan said with many investors increasing the amount of money held in cash in order to reduce risk, trustees could be putting themselves at risk of not meeting their retirement goals.

“In a period of heightened regulatory change, it’s clear that many SMSF trustees are looking for help to set up the right portfolio to reduce risk while still supporting their retirement goals,” he said.

“It’s an opportunity for advisers to share their expertise with new and existing SMSF clients.”

The AMP research also revealed a potential concentration risk in equities for SMSF trustees, Keegan said.

“It’s important to not only consider diversification in the equities held but also across different asset classes, including infrastructure and property, for example,” he said.

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