Research into the superannuation industry has shown financial planners’ expectations of how much SMSF client revenue would contribute to their practices over the past three years have not been met.
The Vanguard/Investment Trends “2016 Self Managed Super Fund Reports” revealed on average financial planners were deriving 19 per cent of their practice revenue from SMSF clients.
This is significantly below their expectations reflected in the same study three years ago when financial planners thought 31 per cent of their revenue would come from SMSF clients by 2016.
“They’ve been saying the same thing for the last six years or seven years and it just hasn’t been materialising,” Investment Trends head of wealth management research Recep Peker said.
Despite such a poor conversion of expected SMSF client revenue historically, the 2016 research found financial planners remained optimistic about the importance of the sector for their businesses.
To this end, the research showed participants expected SMSF clients to provide 27 per cent of their practice revenue in 2019.
“They’re still saying [their SMSF revenue will grow significantly]. Planners are still committed to growing their SMSF business, it’s just it’s not coming through and different challenges are holding them back,” Pecker noted.
In regard to the factors hindering SMSF client revenue growth, the report identified three main issues.
“The top challenge planners said they were facing was around admin and compliance. They made comments like ‘it’s too hard to do’, or ‘I don’t necessarily know everything around doing compliance for SMSFs’,” Peker said.
“There are many who say ‘I have challenges in relation to working with accountants’ as well.
“And then there are those planners who are struggling to actually acquire SMSF clients.”
In line with the difficulties cited in making SMSF clients a profitable pursuit for their businesses, the survey showed the proportion of planners who did not service SMSF clients had remained steady at 31 per cent over the past 12 months.
According to the report, that proportion stood at 27 per cent between 2008 and 2014, meaning no ground had been made to correct the slide over the past two years.
