More financial planners are advising on share trading transactions in response to client demand, with the trend set to continue, industry research from Investment Trends has indicated.
The “April 2013 SMSF Planner Report” revealed 85 per cent of SMSF planners stated they had either advised on or carried out their SMSF clients’ share trading, compared to 69 per cent in 2011.
In last year’s report the figure was 71 per cent, indicating strong growth.
“In particular, we have seen a strong increase in the proportion of SMSF planners who said they transacted on their SMSF clients’ behalf at 41 per cent, up from 31 per cent in 2011,” Investment Trends analyst King Loong Choi told selfmanagedsuper.
“We found 41 per cent of SMSF planners said they transacted on direct shares on their clients’ behalf, which is up from 31 per cent in 2011.”
Direct share trading by planners was 36 per cent in 2012.
Choi said adviser involvement with their SMSF clients’ share trading was therefore key for planners to do well with those clients.
“[This is the case] especially since 95 per cent of SMSFs hold direct shares and SMSFs have half of their money in direct shares and other listed investments,” he said.
“Planners that don’t advise on direct shares are shooting themselves in the foot, though looking forward, 43 per cent of planners intend to increase their level of involvement in their SMSF clients’ share trading, mainly because client demand has increased somewhat.
“Of the 43 per cent, 54 per cent listed this as their reason, while 46 per cent cited their reason as doing more shares advice in general.”
The report also found barriers to direct shares advice, the biggest one being compliance risk as cited by 41 per cent of advisers.
Other barriers were too much work required to monitor individual stocks and not being an area of speciality.
There was also a growing obstacle caused by platform fees where planners still believed fees were too high for direct shares.
The report was based on a survey of 417 financial planners.
