Practice Management

New breed of SMSFs to drive advice model

SMSF investors who fall into the outsourcer and coach seeker categories are destined to disrupt the industry and the way advice is delivered in the future, according to the latest industry research.

The joint study by Commonwealth Bank of Australia (CBA) and the SMSF Association, “CommBank SMSF Report 2017”, released today, revealed four distinct SMSF profiles: outsourcers at 13 per cent, coach seekers at 22 per cent, self-directed investors at 30 per cent and controllers at 35 per cent.

The study said outsourcers and coach seekers, together making up 35 per cent of the market, were most likely to disrupt the current advice model, breaking the stereotype of the traditional, older male trustee profile.

It found 97 per cent of outsourcers sought advice on superannuation, while two-thirds relied on finance professionals, demonstrating an emerging demand for “one-stop shop” advice and administration services in order to streamline their SMSF requirements and efficiencies.

Meanwhile, coach seekers had the highest proportion of younger SMSF members, were most likely to have established their fund in the past two years, and had the greatest number of women compared to the other categories.

This segment was most likely to use multiple advisers as mentors, the report said.

“Looking at the changing market, the outsourcers and coach seekers are looking for advice – we always hear about nobody ever wanting to pay for something, but this piece of research confirms that people will pay if they’re with somebody that’s assisting them and meeting their needs,” SMSF Association chief executive Andrea Slattery said at a media briefing in Sydney today.

“Within the SMSF environment and through this research, trustees [of these two categories] will pay for it if there’s value in it.

“It also shows that for outsourcers and coach seekers, the majority of women as well as the younger generation are more likely to be pay for something if they see value.

“So they are really shining through as the future opportunity as they will change the way in which they want to receive advice, how the services are delivered and how efficiently they require it.”

CBA head of SMSF customers Marcus Evans added that 88 per cent of outsourcers were spending $1000 or more a year on advice, while 48 per cent were spending more than $3000 a year.

“Our research shows a new generation of SMSF investors is destined to disrupt the industry,” Evans said.

“The newer generation is certainly also more open to diversification and tied into that are the technology [developments].

“As the SMSF market continues to grow and evolve, product providers and advisers need to adapt – if this new generation of SMSF investors are to access the products and advice they seek, the industry will need to create service offerings that are relevant to each of the investor types and account for their unique preferences.”

He said he expected an increase in the coach seeker-type of investor in the SMSF market over the next few years.

The report was based on a survey of 1375 Australians and was conducted by ACA Research.

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