Financial Planning

Perception tarnishing SMSF advice

SMSF financial advice

Poor industry perception is preventing younger SMSF trustees from seeking financial advice to assist them in the running of their own super fund.

The latest SMSF research has shown individuals’ perception regarding financial advice rather than actual lived experience is shaping their decision to run an SMSF without any expert assistance.

The “Vanguard/Investment Trends SMSF Report” for 2022 revealed around 45 per cent of respondents during the period spanning 2020 to 2022 are not using a financial adviser because they are too expensive.

However, around 14 per cent of those surveyed indicated they had stopped receiving financial advice because of poor outcomes.

“One of the really interesting things coming out of this year’s research is the perception versus the reality [about financial advice]. The Vanguard research says advice adds value, but the perception from what you might call the COVID cohort is that advice is too expensive, but they haven’t actually tried it or test driven it,” Vanguard Australia head of corporate affairs Robin Bowerman noted.

Bowerman acknowledged there have been recent industry dynamics that are real and have probably contributed to this perception. These include the trend for advisers to focus more intensely on high net worth individuals, making access to advice more difficult, as well as a reduction in the number of practitioners creating a supply shortage and in turn driving up the price of these services.

“But again I think it comes back to the younger cohort having views about advice and the advice industry that probably don’t match up with the reality,” he said.

According to Bowerman, people who receive financial advice often have a poor perception of the advice industry as a whole, but this sentiment is never applied to their own adviser.

“Once people have an advice relationship, then they tend to be very strongly supportive of it, but these folks, what is coming from the younger cohort, is [they] just haven’t had that experience with an adviser,” he said.

“So I think the challenge for the advice industry is how [does it] get the message across that [SMSF trustees] can benefit from advice [and] that it’s going to be affordable.

“That’s the big question going forward.”

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