Millennials have a reputation for shaking up industries and now they’re making waves in the financial services world, specifically with SMSFs. Armed with technology and a desire for financial control, millennials are embracing artificial intelligence (AI) as a tool to help them manage their SMSFs efficiently and in line with today’s fast-paced, digital-first world. This shift is not only influencing how SMSFs are administered, but is also prompting the entire accounting and financial services sector to evolve.
The “Class 2024 Annual Benchmark Report” highlights some notable trends about millennials and the generation X cohort in the SMSF space. According to the study, both generations are significantly driving new SMSF establishments, with gen X leading the way, contributing to over 52 per cent of new funds. Millennials aren’t far behind, making up about 24 per cent of establishments. Together, these two generations represent over 76 per cent of all new SMSF set-ups, showing their growing interest in taking control of their retirement savings.
Millennials are particularly drawn to technology-driven solutions, such as AI, to help them manage the complexities of SMSFs more efficiently. This generation is leveraging AI to automate compliance, simplify record-keeping and streamline the administration process, aligning with their preference for digital solutions that enhance convenience and control.
Moreover, millennials and gen X are not just focused on financial efficiency; they are also concerned about aligning their investments with their values, particularly in areas like sustainability and ethical practices. This is reflected in the ”Deloitte Global 2024 Gen Z and Millennial Survey”, which found many millennials prioritise working with businesses and employers that share their environmental and ethical values. This mindset carries over into their SMSF investment strategies where they seek greater transparency and control.
Millennials steering the SMSF revolution
For millennials, traditional financial services models often feel outdated. This generation craves flexibility, autonomy and real-time solutions. SMSFs offer exactly that – complete control over their retirement savings and the freedom to make investment decisions that align with their values and goals. However, with control comes responsibility and SMSF administration can be a complex and tedious process.
Millennials have grown up in a digital world, so they naturally gravitate towards solutions that simplify their lives. With AI stepping into the SMSF space, it’s no surprise millennials are embracing this technology to manage their funds more efficiently.
AI: the efficiency boost SMSFs needed
AI has quickly become a critical tool in making SMSF management less burdensome and more accurate. By automating many of the manual tasks involved in administration, such as compliance checks, data entry and record-keeping, AI allows trustees to focus on strategic decisions rather than getting bogged down in paperwork.
The beauty of AI is that it takes care of the day-to-day administration without human error creeping in. It automates tasks like tracking contributions, monitoring compliance and even flagging potential issues before they escalate. This gives trustees the peace of mind that everything is running smoothly.
AI’s ability to process data quickly and accurately means trustees can stay on top of regulatory requirements effortlessly. With real-time monitoring and automatic updates on the latest compliance changes, AI reduces the risk of non-compliance – a constant concern for SMSF trustees.
The changing financial services landscape
As millennials continue to adopt SMSFs and AI technology, the traditional financial services industry is being nudged in a new direction. AI is transforming the role of accountants and financial planners, who are now expected to deliver higher-value services rather than focusing on administrative tasks that can be automated. The opportunity for accountants lies in shifting their role to become trusted advisers helping clients navigate financial strategies and long-term planning.
The future of SMSF administration is smarter and faster, thanks to AI. But it doesn’t stop there. AI is reshaping how the entire financial services industry operates. Accountants who embrace this shift will be able to focus on providing personalised advice rather than getting bogged down in routine paperwork.
A tech-driven future
AI and millennials are clearly driving the future of SMSFs. With AI making SMSF management more accessible and efficient, it’s no wonder millennials are gravitating towards this financial strategy. They see AI not as a replacement for professional advice, but as a powerful tool that simplifies their financial management and allows them to take charge of their retirement savings.
The integration of AI into SMSFs is an exciting evolution for the industry. It’s making SMSFs more accessible to a new generation of investors and it’s pushing the financial services industry to innovate and adapt. I believe this is just the beginning of what AI can do in this space.
Olivia Long is chief executive of SMSFAI.
