IFAs first choice for new SMSF generation

IFAs first choice for new SMSF generation

Independent financial advisers are the preferred port of call for the new generation of SMSF investors, which make up 35 per cent of the SMSF market and are set to “disrupt the industry”, CBA research suggests.

The CommBank SMSF Report, which was released earlier this week, declared that “a new generation of SMSF investors [are] expected to disrupt the industry.”

According to report, there are four distinct types of SMSF investors that exist: the ‘outsourcer’, the ‘coach seeker’, the ‘self-directed investor’ and the ‘controller’.

Head of SMSF customers at CBA Marcus Evans said that out of the four types of investors, the ‘outsourcer’ and the ‘coach seeker’ are the new generation of investors that are set to disrupt the industry, and together they make up 35 per cent of the SMSF market.

The ‘outsourcers’ account for 13 percent of the market and have low financial confidence with a tendency to outsource the day-to-day running of their funds, the report said.

Meanwhile, 97 per cent of ‘outsourcers’ rely on a financial adviser with the majority turning to independent financial advice (50 per cent). The second preferred go-to for advice was a bank financial adviser (12 per cent), the research showed.

“Outsourcers are big spenders on advice, with 88 per cent spending $1,000 or more a year and 48 per cent spending more than $3,000,” the report said.

Accounting for 22 per cent of the market, ‘coach seekers’ are more confident than ‘outsourcers’, however remain modest about their abilities. According to the report, 48 per cent of 'coach seekers' are not confident managing their superannuation while 45 per cent say they are confident.

The report also showed that 91 per cent of ‘coach seekers’ have an adviser, while 41 percent have two or more.

Independent financial planners were their main port of call for advice (43 per cent) and accountants were the second preferred option (22 per cent). Seeking advice from a bank financial planner was the least preferred option.

“The growing pool of outsourcers could potentially disrupt the market by requesting one-stop shop advice and administration services that take the stress out of active SMSF management," Mr Evans said.

Coach seekers are the other key potential market disrupters and coach seekers have the highest proportion of younger members, the highest number of females and are most likely to have set up their SMSF in the past two years, CBA said.

“We expect to see an increase in the coach seeker type of investor in the SMSF market over the next few years,” Mr Evans said.

According to the report, the biggest challenges for the four investor groups include dealing with conflicting information, lack of expertise and an overload of unclear, complex and contradictory information.

“That suggests there are significant opportunities for advisers to connect with clients by providing jargon-free advice and educational resources while promoting their specific expertise in areas where there are already advice gaps,” the report said.

IFAs first choice for new SMSF generation
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