SuperConcepts SMSF technical support executive manager Nicholas Ali has spent his working life in financial services, starting out as an adviser before stepping into a specialist role. He speaks with Tharshini Ashokan about what he learnt as an adviser and how that drives him today to find the best outcomes for other practitioners and their clients.
How long have you been in the financial services industry?
I’ve been in the financial services industry since 1996. I started straight out of university so other than driving forklifts in a factory, it’s all I’ve ever done. I’ve been specialising in self-managed super since 2004.
What was your first job after university in financial services?
I started as a paraplanner, where I got a good technical grounding. I then became an adviser and through being an adviser saw self-managed super funds were a specialty that really appealed to me. So I moved over onto that path and became an SMSF specialist in the sector.
What was it about SMSFs that appealed to you when you were in that advising capacity?
The thing that appealed to me about SMSFs was the flexibility. At that point in time there were quite a few things you could do that you can’t do now. I’ve always been interested in the technical aspects of planning and retirement planning, rather than the broader scope of financial planning. I found being a generalist was too much. I decided I couldn’t be a jack of all trades and be a master of none, and that I’d rather specialise in something.
How long were you an adviser and what front-line experience did you take into your SMSF specialist technical role?
I was an adviser for 14 years and so am able to empathise with what drives financial planners within the SMSF space. One thing a lot of planners find difficult is the question of what their client value proposition is with an SMSF. It can be difficult to define if they don’t have a technical background because SMSFs are really very complex. There are so many moving parts it’s difficult to be abreast of the changes and the nuances of things. What I found was advisers who wanted to be in the SMSF space would often lack the technical competencies to actually have confidence in what they were doing. That’s what helps me now – I do actually understand where advisers are coming from, and also where accountants are coming from, with regard to SMSFs. It’s because I come from that coalface background and I find that I’m able to talk strategies with advisers and help them build their client value proposition. That’s the role that I have at SuperConcepts, to sit behind the adviser and make them look good to their clients. In many ways the advisers are my clients.
In your current role it seems you get to help thousands of clients through their advisers?
That is very true. If you’ve got a room full of advisers, you might be effectively talking to a thousand SMSFs or a thousand trustees. SuperConcepts does have a lot of direct clients and I do still deal directly with clients, but not in the financial advising space, more in the compliance-related space. Dealing with advisers, you get to have greater exposure to more funds than you would if you were dealing directly with SMSF trustees.
Does that put pressure on you as the ‘go-to guy’ to get it right every time you assist advisers?
Yes, there’s a little bit of pressure. The good thing though is that the SuperConcepts team is really strong. We support each other and put together a house view, which is the view we roll out to the marketplace. We think we’re probably the best technical team in the nation and we bring different things to that aspect of the business. So, yes, while there’s pressure, we’re pretty good when it comes to putting together what we think is the right view. Sometimes, with things like the transfer balance cap that haven’t really settled down, even the ATO doesn’t always know what the right view is. We work closely with them. They’re much maligned, but the ATO is actually really good to deal with.
How do you and your peers come up with a consensus view to present to your clients?
Often things are technical, but there is a pathway to coming up with an answer. If there’s something that we’re really not sure about or there’s nowhere in the marketplace where we can get that information, we also deal closely with other technical experts. While the industry is competitive, we do have good camaraderie, so we’ll share anything that we’ve got with the broader marketplace. If there’s something nobody really understands or it’s clearly something that is conflicted, we then put it to the ATO or Treasury for SMSF-specific advice. We’ve got connections there and it then gets funnelled up to ministers, or whatever the case may be, and it will appear as something that needs to be addressed.
Do you get a bit of a buzz out of unravelling something quite complex and coming up with a good solution?
From my point of view, because I come from that coalface background, if I raise an issue, it’s something I’ve seen live and when I raise one of these questions, there’s a real person at the end of it. It’s not ethereal or an academic exercise. If you can solve it, especially if the solution is a positive solution, it’s good to know I’m going back to the adviser or a direct client to say the issue has been clarified. Often, with regard to more complex issues, it’s usually around the passing of a spouse or an event where if you can come up with a good solution, you’re not just coming up with a good solution, you’re benefiting somebody’s family in a stressful period of their life. The other thing which I think holds me in good stead is being a very strong communicator with advisers and intermediaries and direct clients, and that’s been instilled in me from the days where if you didn’t make a buck as an adviser, you literally didn’t eat. If you’ve had a little financial planning practice yourself, where you’ve had staff that were reliant on you to generate revenue so they can be paid, it does sharpen your sense of solving the problem and communicating with people. I’ve found the more you communicate with somebody, when things go wrong, the more rope they’ll give you. Whereas if you don’t communicate with people, then when something goes wrong, they’re going to be annoyed on two levels: number one, you didn’t communicate with them and number two, when you do, you’re giving bad news. So yes, that planning background and dealing with clients directly has helped in regards to just building that empathy with people.
What’s been the most common issue advisers have raised with you in 2019?
I would say the most common question that has been raised is around estate planning death benefits and how that interacts with the transfer balance cap. The other question we’re starting to get a lot of now, from younger people, is insurance through super because of the opt-in/Protecting Your Super change, which came into effect on 1 July. That seems to have caused a flurry of activity.
What have been some of the most significant changes you’ve seen in the SMSF sector?
When Simpler Super came in on 1 July 2007, I was sure I wasn’t going to have a job because I didn’t think anyone would need an SMSF specialist anymore, but Simpler Super turned out to be the biggest misnomer of all time. Then we come to the $1.6 million transfer balance cap, which I personally think hasn’t been bedded down well. Whether that’s a case of systems not being able to cope with a lot of the changes, or whether it’s a case of perhaps too much too quickly, some aspects of it weren’t completely well thought out. I think most people are of the opinion the cap has caused a lot of confusion, and I think in part it’s because the industry isn’t as well educated as it should be or could be, and will be.
If you could make one change to the SMSF space, what would it be?
The first thing I would change is to take superannuation out of the budget cycle. The purpose of superannuation needs to be enshrined in the legislation. We need to get away from the budgetary cycle where superannuation is seen as this pot of honey from which will come forth everything that needs to be solved in the fiscal environment. The other thing I would say is if we do enshrine superannuation in the legislation, it needs to be aspirational and it needs to be more than just giving you a replacement for the government-funded age pension. That’s not to say superannuation should be used as a wealth transfer mechanism. I just think if you work hard and put money away for your retirement, it should have an aspirational aspect to it. We need to get it out from the subjective and cynical nature of politics. It’s being used as a political football and that undermines the system. If younger people don’t have faith in our retirement savings system, it undermines how well we all live in retirement, so I think younger people need to have faith superannuation will not be chopped and changed every time a federal budget is handed down.