Diversified Financial Planners SMSF strategist Dean Hutchins was an early recipient of a specialist accreditation. He discusses with Darin Tyson-Chan how important it was to be recognised by his peers and the effect his own illness has had on providing advice.
How did you first become involved in the SMSF sector?
I first started in the financial planning industry in 1999 and 2000 looking at insurance within some retail super funds. In 2005 I made the decision to really focus on SMSFs. When you start you tend to want to be a generalist, but estate planning took my interest because I always thought there wasn’t much around as far as good advice in estate planning. Then after talking to one of my business coaches I started to realise providing advice on SMSFs allowed you to put together a variety of strategies and that’s where you could really add value. That’s what I really wanted to do, to add value rather than working on retail funds where it was more about placing an investment in the hands of a fund manager.
So how did you go about specialising in the space?
I started doing the basic readings and then joined the SMSF Association and proceeded to get the SMSF Specialist Advisor accreditation from the body. That was tough because I didn’t have an SMSF mentor as I’d run my own business since I left university. So what I did was take a couple of two-week breaks from the business and all I did in that time was read the relevant legislation. I also used the internet to self-research the issues I wasn’t sure about. I ended up sitting the exam and getting the accreditation. Being a member of the SMSF Association also gave me an introduction to Dan Butler and Grant Abbott and some of the other well-known experts in the sector. It enabled me to have discussions with them and I really liked the way Grant handled the discussion, so that pretty much won me over. So I completed one of his specialists’ courses in Sydney and got a lot out of it.
You could probably be considered an early adopter of specialising in SMSF advice. Has this been advantageous?
Absolutely. There are people who have been servicing the space for longer than I have, but being able to nut out some of those really difficult strategies, structures and the more complex issues early on has meant every time some new legislation has been introduced or a new strategy formulated I have been able to get onto it straightaway rather than catching up three or four years later. Servicing the space early has allowed me to put the required processes in place, enabling me to move quickly on all of the latest SMSF developments.
What services do you offer your SMSF clients?
We offer an end-to-end service for our clients, not just transactional items. Our service allows clients to be assured that, while obviously it’s still their responsibility, we’re assisting them in all of those steps to ensure their fund is compliant to the highest degree possible. We’ve put good, appropriate strategies in place for all of our clients and are constantly adapting them to the latest changes like the proposed new superannuation legislation in the budget. Our focus is to provide a comprehensive service. So we’re not interested in clients who just want some one-off advice and we’re not after someone that wants to just have a term deposit in a super fund or just one investment property and have us help them with their administration. For us it’s all about getting the structure right and adding the value and our feedback tells us all the clients think what we do is fantastic and do see the value in it.
In recent times you were recognised by your peers for providing the best SMSF strategy. What was the strategy?
I had a client who became diagnosed with terminal cancer and he had a total and permanent disablement payout that was substantial and could leave him with a significant tax liability. So I had a look at the legislation, formulated a strategy and sought an outside opinion as to whether it would be okay. The strategy was confirmed as legitimate so we were able to put the recommendation in place and ended up saving the client from a significant tax liability. He’s still alive and he’s now able to see his days out with a tax-free retirement pension that has enabled him and his wife to stop working and enjoy life as much as possible.
How much did this recognition mean to you?
The award was presented to me at one of Grant Abbott’s annual SMSF conferences about 18 months ago. That community includes some of the best SMSF advisers in the industry and to be recognised amongst such a high standard of peers was just something I think is incredibly humbling and was just a great shock to me. It was incredible. I’m not a person that is trying to get my face on websites or in publications, that’s not me. I’m just a guy that works out in Frankston [in Melbourne] and tries to do a good job, but it was fantastic. I loved it, I love the award and just polish it all the time.
How critical has the SMSF specialist accreditation been for you?
It was really good because when I took the exam there was nothing to separate people that had no idea what they were doing from people who had expertise. I was pretty proud of getting the accreditation because there weren’t many specialist advisers at the time, probably a few hundred, so it did put you in a more select group. In terms of the accreditation, being recognised by clients and the public I’ve had one phone call from someone who visited our website that was linked to the designation. But I don’t know if any of my existing clients have expressed to their peers the level of satisfaction they’ve received because I’m an SMSF Specialist Advisor. It hasn’t been my process to ask clients if they’ve researched my background.
You suffered from a serious illness not so long ago. Has that experience made you a better adviser?
I certainly value my life a lot more. I’ve always told clients exactly what they need to do to have the wealth they need in retirement. The problem with that is they may forget to live for today as well. So, for me the discussion has always been about let’s think about that long-term retirement, but let’s not forget about today either, let’s find a balance. Having experienced a bad illness myself has given me a good discussion point about the fact that we never know what’s around the corner tomorrow. I mean here I was, the week before I became ill, I’d done 100 kilometres on an exercise bike, been to the gym three or four times that week, was 35, 36 years old and was as fit and in top physical condition as you can imagine. Then two weeks later I’m paralysed in bed. A lot of people think it won’t happen to me and I was certainly that guy. So it does actually give me that discussion point now and I suppose it gives me a little more backing when I’m saying don’t forget about today.
What’s the biggest change to the SMSF sector you’ve seen?
It would have to be when they removed all the RBLs (reasonable benefit limits) and introduced the tax-free pensions in 2007. That was the most significant change and I think everyone we dealt with just thought they were the best changes that could possibly have happened in their time. So they got it right there and they were good changes that gave people confidence in the sector.
What would be the one thing you’d change about the SMSF sector?
I think what needs to change is the level of unqualified advice being given to clients. People are getting some bad information. We deal in fixing up errors where either accountants or advisers think they know what they’re doing, but really have no idea. Now I’m not going to say that they shouldn’t be operating in this space, but they need to get their knowledge levels up. If you want to be in this space, then get your knowledge up. If you’re just trying to dabble around the edges, stay out of it and don’t put the clients at risk. That’s the area I think needs improvement and a minimum education standard is required.
Over the next year what’s the most significant challenge facing the space?
It’s dealing with the proposed legislation in this year’s federal budget whatever shape it’s going to take. We’ve got an election so we could have a change of government and these proposals have still got to be passed in parliament. So they could look fairly different then to what they look like now, but nonetheless we’ve got to deal with it. This legislation is going to be really tough for people to swallow. You know we’ve got this situation where we’ve got people who, effective from 3 May, have to deal with the situation of having a lifetime non-concessional contributions cap of $500,000. But the detail as to how it will work may not eventuate until 12 or 14 months’ time, meaning people can’t do anything during that period. So dealing with this proposed legislation will be the biggest challenge.