Speaking at the SMSF Professionals’ Association of Australia (SPAA) national conference in Melbourne today, Russell Investments’ Asia-Pacific chief executive Alan Schoenheimer said advisers need to address “over-confidence” in SMSF trustee clients.
“Advisers need to provide influence without taking control,” he said. “They should nudge clients in the direction of diversification without confrontation.”
Schoenheimer said advising SMSF trustees was a particular challenge as a majority of clients in this space highly value their independence and control over investment decisions.
Advisers need to develop particular skills for meeting this challenge, countering the “preference for control and preference for the familiar” displayed by many SMSF trustees, he said.
The comments follow the release of research conducted by Russell Investments in association with CoreData, which found a strong preference for particular asset classes – namely Australian equities and cash/fixed interest – among SMSF trustees.
While, according to the Intimate with Self-Managed Super report, more than 60 per cent of SMSF trustees display a “strong or very strong investment knowledge” in the eyes of their advisers, opportunities for greater diversification should be created, Schoenheimer said.
“Advisers need to think of formats and vehicles through which SMSF clients will be comfortable investing in asset classes such as international equities, rather than simply stock picking,” he said.
I think the challenge with SMSFs is that clients go into them with perceived ideas on what they intend to invest in. That’s why the set up a SMSF, so they have control. I think they are missing a beat, however the onus is on the planner to highlight alternatives. this requires some sales skills, but a planner that knows their products and has established a good relationship with their client should find the process relatively straightforward