Financial Planning

SMSF unmet advice needs grow

financial advice needs SMSFs

The unmet financial advice needs for SMSFs are varied and growing, with the majority of funds reluctant to seek advice on their unmet needs.

The number of SMSFs with unmet financial advice is growing and the vast majority of funds face barriers to having those needs met, the latest analysis from Vanguard and Investment Trends has revealed.

According to the “2019 Vanguard/Investment Trends SMSF Reports” launched today, 315,000 SMSFs have unmet investment advice needs, up from 275,000 in 2018.

Investment Trends chief executive Michael Blomfield said the number was too high and the basic nature of trustees’ advice needs was “troubling”.

“If you’re going to be an SMSF trustee, then tax and income strategies are pretty fundamental, as is planning for your retirement and your portfolio strategy. But these are all things that people need advice and assistance on,” Blomfield said.

He highlighted the 80,000 trustees who said they needed more advice on inheritance and estate planning in particular, and said having six-member funds could be a way to combat issues in this area.

“The mode that we have today where we’re serving a group of people, 50 per cent of whom are in retirement of some form, who are from a generation that had at least 2.5 children and they are a couple – they don’t have room to put their kids in the trust. There are a bunch of problems that do flow from that, which is why we’re hoping to see [six-member funds] come through,” he said.

The report, based on a survey conducted between February and April with close to 5000 respondents, also revealed four in five SMSFs faced barriers to having their advice needs met.

Blomfield pointed to the report’s findings that over 30 per cent of trustees cited a lack of confidence in the expertise of financial advisers as a barrier to them seeking financial advice, and said a key factor in the high number of trustees losing confidence in advisers was the uncertainty in the sector over the past 12 months.

In addition, almost 30 per cent of trustees surveyed were of the view that seeking financial advice would cost too much, with over 10 per cent of trustees stating they were unclear about what the cost of financial advice would involve.

“They’re just not finding the value proposition at a price that they really think is worth it,” Blomfield noted.

He said trustees were more likely to seek help on an “as-needs” basis, whereas financial planners had a tendency to take an “all or nothing” approach when it came to helping trustees with their fund, and this was an additional challenge when trying to meet trustees’ advice needs.

Last year’s report revealed many financial planners had been unable to use the growth of the SMSF sector over the past 10 years to their advantage.

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