Financial Planning, Investments

Investment decisions challenging trustees the most

investment decisions trustees

Choosing specific assets and investments is the most difficult decision trustees face in running their SMSF, research has shown.

The latest industry research has revealed SMSF trustees believe choosing what specific assets and making investment decisions are the hardest actions in managing their own retirement savings vehicle.

The “2019 Vanguard/Investment Trends Self-managed Super Fund Reports” showed 34 per cent of respondents found this element of running their fund the most difficult.

“In a sense this doesn’t really make sense. There is a lot of work to be done around keeping track of rules and regulations, and they are sensitive to it with 28 per cent of people saying that’s the toughest thing about managing an SMSF, but still there are more people and a growing proportion of people who say choosing what to invest in is hard,” Investment Trends chief executive Michael Blomfield said.

This sentiment does fall into line with the current economic conditions, as well as a pessimistic view of the markets SMSF trustees have currently, Blomfield noted.

“If you’ve got a 1.7 per cent return expectation for the Aussie market, you’ve got a cash rate at 1 per cent, then it does become very difficult to know where to put the super money,” he said.

By contrast, the study indicated the majority of advisers, 35 per cent, found compliance the most difficult aspect of servicing SMSF clients.

Further, most respondents, 38 per cent, indicated they thought regulatory uncertainty would increase in the years to come.

“Regulatory uncertainty is the one thing we do see constantly as an issue that makes life very hard for the people who invest and the people who advise them,” Blomfield said.

The report also showed the time trustees spent running their SMSF had increased from 7.6 hours a month in 2011 to 8 hours a month in 2019. Of that total, 3.3 hours per month are spent on selecting or researching specific investments.

“For all of the technology, we’re in an arms race of technology that’s been brought in to assist in the management of an SMSF, people are spending longer today [managing their fund] than they were eight or nine years ago,” Blomfield noted.

The research was conducted between February and April and processed responses from 4927 investors and 286 financial planners. The study also found SMSF trustees continued to have unmet advice needs.

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