Financial services professionals are ignoring self-managed superannuation fund (SMSF) investors at their — and the Australian economy’s — financial peril, according to new research by Standard & Poor’s (S&P’s).
According to S&P’s latest capital market research, financial services professionals are failing to provide SMSF investors with much-needed education and investment tools. This is despite the fact SMSFs are Australia’s second largest fund type, accounting for 25.2 per cent, or $290 billion, of the nation’s $1.2 trillion superannuation pool.
S&P head of capital market research Phil Bayley expressed concern that this “spectacular” growth in the DIY super sector posed serious questions over whether the resources they control will best benefit Australia’s economic growth.
“SMSFs generally don’t have the same access to the investment tools and opportunities that are available to institutional and professional investors,” said Bayley.
“It would therefore be easy to argue that amateur chief investment officers should not be controlling up to one-third of Australia’s superannuation assets and that assets should be handed over to professionals to manage.”
Bayley acknowledged that Australians are being asked to provide for their own retirement and many DIY investors are doing a good job, successfully navigating recently turbulent markets.
“However, to ensure the maximum benefit to the Australian economy from this pool of savings, the SMSF sector should be provided with assistance to maximise its future success.”
Bayley said SMSF investors’ primary education needs are investment fundamentals, particularly understanding the concept of risk and return, risk management and the importance of diversification. Assistance with fixed interest investments was also needed, he said.
“There is a substantial new customer base to be tapped into and, in the debt market, there is an opportunity to create a deeper, more liquid and transparent market than the opaque, over-the-counter market that operates at present.”
