Fractional property provider DomaCom has revealed it will push its Property SMSF to gen Ys, following early interest coming through from children of advisers’ clients.
DomaCom head of sales and marketing Warren Gibson said the Property SMSF was not a product per se, but rather a service offering based on the company’s belief generation Y largely preferred property to equities because they understood it better.
“They also want to get their foot on the property ladder before it runs away from them price-wise,” Gibson told selfmanagedsuper.
“We have three aligned service providers in CST Corporate Solutions, Just Super and Evolv Super Audits to respectively create, administer and audit a SMSF for a one-off $750 set-up cost and an annual fee the greater of $495 or 1 per cent per annum of the value of the fund, capped at $1035.
“The idea behind this is to create a nursery for younger generations – a lifetime SMSF that they can take with them throughout their career.”
For example, a gen Y with $40,000 could invest in multiple properties, as many as 20, and have a diversified portfolio just as they would in the equities world, he said.
“A bit of residential, commercial, high or low-yielding in different geographic locations,” he said.
“A few of our financial adviser clients are interested in testing this with the children of their clients and in marketing to a younger generation.”
The one provision was that they only invested in fractional property interests to secure the low fee, he said.
“At any time, as their fund grows, they can add other asset classes to it, but the cost to administer and audit will likely begin to increase when this happens, but for the first few years they can have a low-cost SMSF and build their property asset allocation, which generally requires more time to increase anyway,” he said.
The Property SMSF offering was also a good low-cost way for advisers to seed their next generation of clients, he said.
“You’ve got to have a bit of vision for the future,” he said.
“It may well also suit younger advisers to do this because in 10 years’ time they’ve got that client because they’ve already [established a relationship].
“So that’s the idea behind it – to seed tomorrow’s clients today.
“And we want to encourage them, get them into a good habit and they have their own lifetime SMSF.”
The DomaCom Fund is now on 33 approved product lists.
“There are still about another 23 or 24 others that are sitting on the fence, so slowly but surely it’s getting there and we have investors in every state except for Tasmania,” Gibson said.
“The breadth of interest is widening.”