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SMSF advisers must focus on gen X

The generation X demographic is the group of clients financial planners and accountants need to focus on if they want to build a successful SMSF advisory business, according to an industry expert.

SMSF Strategies principal Grant Abbott told delegates at the 2013 SMSF Strategies Day in Brisbane that gen X were the individuals providing the greatest advice opportunities for the next seven years.

“About 43 to 44 per cent of all superannuation balances are accounted for by gen X. The current super balances in Australia now total $1.3 trillion, so the amount gen X controls translates to $570 billion,” Abbott said.

The behavioural characteristics of generation X made for an even more compelling case to service that group, according to Abbott, because both people in a gen X couple usually were gainfully employed.

“It’s fantastic because for financial planners and accountants servicing SMSF clients it means they get two bites at the SG (superannuation guarantee) cherry for these types of clients,” he said.

“This is the golden rule for anyone in an SMSF business. Why wouldn’t you set up a business where you know that every quarter 9 to 10 per cent of a person’s salary is being force fed into a savings plan.”

He said unlike the mining and resources boom, for example, superannuation was not cyclical, meaning it would always be present.

“If anything it’s going to increase,” he said.

Abbott estimated that by 2020, $1.1 trillion would be sitting in gen Xers’ superannuation accumulation accounts.

“So generation X for the next seven years is where we should focus in on,” he said.

While generation X was where all advisory attention needed to be, Abbott also pointed out why baby boomers, who up until now had been the lifeblood of advisory practices, would not drive SMSF businesses into the future.

“You are not going to try and build an SMSF business now upon the back of baby boomers because they’re either in an SMSF or will never be in an SMSF,” he said.

“If we look at 2020, there are not going to be many baby boomers left that are still accumulating. Most of them will have set up a transition-to-retirement income stream or an account-based pension by then.”

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