Business News

Institutions need to avoid SMSF packaging

Large financial services organisations looking to gain traction in the SMSF market must abandon the traditional packaging approach, according to a sector consultant.

Mayflower Consulting founder Sarah Penn said up to now many larger institutions had tried to offer a range of services to SMSF clients packaged together, in line with their customary activities, but had found that strategy unsuccessful.

“Many conversations I’ve had with people, especially in the funds management side, are around packaging. The general train of thought has been to say ‘just tell me what they need and we’ll package something up for them’,” Penn said.

“Unfortunately, packaging is one of the things that is most disliked by SMSF trustees.

“They want to choose each component of their own fund to make their SMSF. That may end up being all with one financial institution, and that’s fine, but the trustee wants to make each of those decisions individually.

“So packaging is the opposite to what they want.”

She said SMSF trustees liked the thinking behind the concept of packaging, but ultimately wanted to make decisions based on individual components of the whole offering – a mindset that made commercial considerations extremely challenging for financial services organisations.

“The interesting thing there is if you give away a whole lot of intellectual property, and SMSF trustees only use you for 20 per cent of their portfolio, how do you monetise that relationship?” she said.

While the interaction with SMSFs was difficult and needed to be different, she stressed success could be achieved.

“There are definitely ways to do that, but you do need to think about it a bit differently to your average managed funds being included on a platform or going out selling funds to financial planners,” she said.

“It’s quite a different sales process.”

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