The trend of trustees bypassing professional advice in favour of non-traditional sources of information before establishing an SMSF is extremely concerning and can be countered by the entrance of more advisers into the industry, according to the Financial Advice Association Australia (FAAA).
The “2024 Vanguard/Investment Trends SMSF Report” released last month found the number of SMSFs using financial advisers had dropped to a five-year low and trustees were increasingly turning to family and friends or the internet for guidance when establishing a new fund.
Speaking at a briefing held by the professional body today, FAAA chief executive Sarah Abood noted the findings were reflective of broader practitioner shortages faced by the advice industry and it had not yet recovered from the exodus of older advisers in the past few years.
“Self-managed super funds are a really important structure and they work well for a lot of people, but they’re absolutely not for the faint-hearted. Becoming a trustee of a self-managed super fund is not a small commitment and I think doing that without financial advice is extremely dangerous,” Abood stated.
“It may be that some of those people tried to get an adviser and couldn’t find one or waited too long and we would be very concerned if that trend continues.
“We’ve lost a lot of experienced advisers that we didn’t need to lose and clients are trying to build new advice relationships and finding that difficult. The loss of that experience has been really problematic.”
She said the outlook was grim as the lack of growth in new professionals entering the field meant current consumer demand for affordable financial advice would not be met.
“We’re now at 15,589 advisers, which is basically level pegging with where we were this time last financial year. That’s down 46 per cent on 2019 adviser numbers, so the profession has almost halved,” she noted.
“New entrants have crashed and they crashed to zero straight after 2019. As of today, we have 312 advisers who first provided advice in 2023. That’s not enough to offset the advisers that are going to retire and we could put a zero behind that number and still not make a meaningful impact on the supply of advice.
“We’ve got this massive demand-supply crunch that’s going to make our current problems even worse and, of course, adviser costs continue to go up as numbers decline.
“There’s a whole lot of reasons why we think getting more numbers into the profession is absolutely critical and an urgent problem for us to address.”
