The number of SMSFs using an adviser to help them navigate difficult share market conditions increased last year, with these funds being more active traders, according to a trading platform.
After examining its SMSF client data, wholesale trading platform Ausiex found an increase in the number of new advised SMSF account openings due to the variable market conditions, while the number of new funds operated by self-directed investors declined.
This growth took place across the millennial, generation X and baby boomer demographics, with the middle group, who stand to inherit much of the pending intergenerational wealth transfer, accounting for the largest proportion of new advised SMSFs on the platform.
“Their [generation X] share of new accounts rose by more than 14 per cent year on year, while the share of new baby boomer accounts rose by a far more modest 2.1 per cent,” Ausiex stated.
“The share of new accounts opened by advisers for younger millennials born between 1981 and 1996 rose 3.85 per cent by comparison, though were significantly fewer in numerical terms.”
Inversely, the platform noted the number of new accounts created by self-directed SMSF investors across all three generational groups fell sharply year on year and some of those funds may not be serviced by an adviser or had shifted to other superannuation funds.
Ausiex strategic relationships national manager Chris Hill said: “Some investors appear to be re-evaluating the effort associated with self-administering an SMSF, presenting a significant business opportunity to planners.
“The complexity of managing a SMSF portfolio underscores not just the importance of professional counsel, but also the need for advisory practices to continually invest in technology that maximises operational and trading efficiencies.
“It’s clear the ‘DIY nest egg’ remains popular and that advisers who invest in technology will maintain a competitive advantage when serving this market segment.”
Hill pointed out advisers and self-directed SMSFs also took a different approach to trading as advised investors were more active and selected a wider range of listed investments.
“Overall trading volumes among SMSFs were subdued over the year as investors opted for quality and income-generating assets, likely to counter market volatility,” he said.
“This was particularly evident in self-directed SMSFs, though trading volumes for advised SMSFs actually increased their trading volume by 1.4 per cent with actual traded value up a robust 6 per cent.
“Advised SMSFs also showed a preference for a broader range of securities than self-directed peers, most notably for exchange-traded funds as advisers appeared to diversify and minimise volatility from their portfolios.”
