Verante Financial Planning adviser and SMSF Association Sydney chapter chair Liam Shorte has been involved with SMSFs for 16 years. He reveals to Darin Tyson-Chan how disruptive the superannuation changes have been for both advisers and clients, but how ultimately the sector will make a gain from the new legislation.
How did you get started in the SMSF sector?
I moved to Australia in 2001 and the first job I got was in an accounting and financial planning firm as a paraplanner. I then did all my courses and became a financial planner in 2004. Because I was working within an accounting and financial planning firm, it dealt with a lot of small businesses so there was very much of an SMSF focus. It allowed me to see how SMSFs played a good niche in the market, so I then undertook the SMSF specialist accreditation and decided that was going to be the niche I would target to get clients.
So recognising SMSFs were a growth area is what attracted you to servicing the sector?
It was the flavour of the day. I’m based in the suburbs and that makes it very hard to be a niche player. However, this was such a big subject at the time I decided I would focus on using it as the leverage piece to get people to talk to me about their financial situation. I still find three out of 10 people who want to establish an SMSF are suited to run one, but it gets them in the door to have that conversation.
What services do you offer your clients?
Predominantly strategy, financial planning and insurance and then we work with accountants and solicitors for estate planning. We do a lot of family trust work through accountants and then complex estate planning working with lawyers on that side of it. About 60 per cent of my work now is to do with SMSFs. I deal with people who do their own investments, I deal with people who I coach to do their own investments and others who I just do their investments for them. So it just depends what the people need and we adapt our strategy to suit that.You’re also the founder of the SMSF Coach website.
How did that come about?
I was at the 2008 SMSF Association conference and I found out about research that had just been done about DIYers, coach seekers and delegators and I just immediately thought I like the coaching side of it. I’d spoken to somebody that said find a niche and work on it, so at that conference I bought the URL, I bought the Twitter handle and set up the Facebook page. From there I just started regularly writing articles and posting them, trying to keep the message plain and simple. I don’t profess to be a guru, so a lot of what I do is take what the technical people give us and just break that down into plain English. Take the legislation and explain what it’s done. It has helped build my profile and the site had about 70,000 hits last year, but it took three years to really build it up, and I know most of the people in the industry that follow it, but I do regularly get the SMSF inquiries through it so it’s excellent. But it was all about building the niche and the profile to get people in the door of my practice.
How did your active involvement with the SMSF Association Sydney chapter happen?
I feel as part of building a profile you’ve got to give something back as well so I joined the Western Sydney chapter. When it opened up they asked for people to volunteer, so there were six of us who volunteered to have a chat and we set up the Western Sydney chapter. Then about two years ago Adam Goldstien asked me would I come out to the NSW chapter with a view to taking over from him as chair once he stepped down from that position. I really do believe what goes around comes around, but the brilliant thing about the SMSF Association is you have got not just financial planners, you have got all the professions, and to be able to walk into a room and have a chat with a lawyer or an accountant and get their viewpoints on a strategy is brilliant because we always just look at it from our own focus as financial planners, but here you get the feedback from an accountant on the tax side and a lawyer on the legal side. It’s great to have that rounding. It gives you the ability to know how the accountant thinks when I sit in front of a client with him.
How disruptive have the superannuation changes been?
I deal with a lot of pre-retirees and among this group it’s caused a lot of trouble. I had a client who is 66 years old and a business owner, and his situation went from him being able to put a non-concessional contribution of $180,000 into his SMSF, to only being able to put a total of $500,000 in, to now being able to put in a maximum of $100,000 per year. I have written some strategies three times so it caused a lot of uncertainty and that damage can never be undone. So some clients have just lost a lot of faith in the system. It means I’m having to sit down with people and say if these are the other options, super still plays a really big, important part overall no matter what, but we may need to start looking at things like family trusts and investing outside of super in your own names. The message is not to lose faith in superannuation because it is still a very tax-effective vehicle and it’s just a matter of making sure you use all the different options to suit you.
[We're] seeing more and more dealer groups understand they just can’t force their planners to just focus on their products, meaning they’re allowing the planners to look at a broader group of platforms and offerings.
Liam Shorte
Will the SMSF sector lose or make a gain as a result of the changes?
I think it will be the latter. People in the SMSF sector will gain from it. I think what we will see is SMSFs getting less prominent in the high net worth market because they will start using family trusts and other things if they’re above the limits. You have got to remember though that the majority of SMSFs only have about $1 million in them so none of the strategies really affect that group. What we are doing now is looking at planning for super from a lot younger age. A lot of my clients in the past four years are in their late 40s, early 50s whereas previously it was always 55-plus. Because of the changes they have to think about it earlier because if you can only make concessional contributions of $25,000 a year, or $100,000 non-concessional, you have got to be planning well in advance. You’ve also got to consider things like super splitting in your 40s rather than your 50s and I think SMSFs will provide the flexibility to accommodate these changes in strategy. So I think the middle to lower end of the SMSF sector will be boosted and the high net worth will fall away.
What would you identify as the biggest change to the sector you’ve seen?
I think it’s seeing more and more dealer groups understand they just can’t force their planners to just focus on their products, meaning they’re allowing the planners to look at a broader group of platforms and offerings. They’re realising, especially in the SMSF space, there’s a demand for exchange-traded funds, there’s a demand for direct equities, there’s a demand for listed investment companies and the fact research is needed to back it all up. Another change is dealer groups are recognising passive investing is very successful as well.
What would be the one thing you would change about the SMSF sector?
Coming from a financial planning point of view it would be to boost the actual reputation of the financial planning side of it. There is still a lot of mistrust within the industry of financial planners so it’s a matter of us building up the confidence. That’s through our education and working with accountants rather than trying to compete with them. I find that when you work as a team, the client wins and if the client wins, you both win as well.
What do you see as the biggest challenge facing the sector in the next 12 months?
It will be any negative publicity that comes out of all of this over the implementation of the changes over the next six months. I think there will be some horror stories, there will be cases where people sell properties inside of super funds or put money in that breach the caps. There is going to be a lot of room for error especially because a lot of the bigger funds are going to be affected, so my biggest concern is managing the media, and managing how what actually happens over the next 12 months is reported. That is, making sure that if something bad happens there is an explanation as to why it went wrong and how it could go wrong. Hopefully over the next six months if everyone works together, we can basically make sure that there are as few horror stories as possible.
