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Current SMSF trustees looking after gen Y

A recent trend occurring in the SMSF space is seeing existing trustees including individuals from generation Y as new members of their superannuation funds.

“What we’re starting to see is a younger SMSF membership pipeline, which I think was inevitable. But what we’re actually seeing is gen X is being missed in the intergenerational wealth transfer process, so a lot of the baby boomers and even the war generation are feeling sorry for gen Y because they can’t buy a home and it’s hard to get a job, whereas gen X is already there,” My Adviser managing director Philippa Sheehan told selfmanagedsuper.

“So these trustees are actually bypassing gen X and bringing gen Y members straight into the SMSF in order to make sure they can afford things that perhaps they couldn’t have otherwise.”

She said the development had happened faster than expected.

“Planners thought they were going to see perhaps gen X come in and then gen Y, but we’re seeing the complete skipping of a generation and the inclusion of the younger ones because they can’t necessarily fend for themselves and they won’t have a lot of assets because life’s tougher for them,” she said.

While gen Ys are being brought into established SMSFs, they are being included as members only and not trustees.

“We are seeing them as members of funds, but they are members of funds with a voice,” Sheehan said.

“But it is a voice that has to be listened to because eventually they will be the ones that will have this intergenerational transfer of wealth, so they need to be listened to from the outset, especially if we are going to maintain them as clients.”

She said she felt the process would be beneficial for gen Ys as an introduction to superannuation and financial knowledge, but acknowledged a significant amount of education was needed.

“At this stage, gen Y members don’t understand the scope or capacity of what they are being involved in and that’s where the education piece comes into play,” she said.

“This will start in the school environment with the very basics through to the older generation teaching them the reasons why you would set up such a structure.

“I think what we’re going to see is that gen Y is more research driven anyway, which means they are going to spend more time looking into what am I involved in, what does it mean I can do down the track, and will be inclined to seek some advice, but will be more inclined to go and do it themselves.”

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