As the SMSF market reaches maturation phase, service providers in the space must recognise two major underlying needs trustees have in order to grow and sustain business, a research executive has said.
CoreData and Janus Analytics director of research Tai Rotem said the fundamental problem investors face is how to make decisions today about an uncertain future, therefore being able to provide certainty is significant.
“Curating decision-making information, doing the math and weighing up the probabilities is hard and bias-ridden – this creates tension that needs to be resolved,” Rotem said.
“Many seek to resolve this tension by searching for someone or something they can trust: who can they pass some of the responsibility to, provide some guidance or at least receive reassurance and validation for the decisions they need to make?”
Convenience is another key factor, he said.
“This is the effort that’s needed to decide and the friction encountered executing it,” he said.
“These ‘moments of truth’ pain points become critical barriers stopping us from moving forward and reaching our goals. An effective solution makes it easier to move past these and reduce the ‘time, complexity and hassle factor’.”
He added inherent in this need to resolve uncertainty is the desire for a modicum of objectivity – facilitated by structure, systems and habits – in making the best decisions as investors.
“Ultimately as human beings we are looking for a narrative, the story we can internalise,” he said.
“We want to be able to articulate how it works, why it’s safe, and why it’s valuable.
“If the trustee of an SMSF cannot explain to their partner why they’ve made a particular decision, why it’s worth entertaining taking a risk for or dealing with additional complexity, they are not going to move forward.”
He underscored research has shown the key to servicing consumers’ underlying needs is identifying their driving motivations, the way they process information, and the experiences and relationships they prefer.
“Critically, it’s about systemically manufacturing reliable and valuable relationships at scale and helping consumers articulating this value,” he noted.
He said a cookie-cutter approach to servicing SMSF clients is unlikely to win over the broader market.