Financial Planners Are Cool Again When It Comes To Self-Managed Super

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Self-managed super funds have regained their appetite for advice from financial planners, according to a major survey.

And with satisfaction advice at its highest since the GFC, there are opportunities for advisers to meet unmet advice needs.

The Vanguard and Investment Trends 2014 Self Managed Super Fund (SMSF) Planner Report, which surveyed 489 Australian financial advisers in April, shows trustees’ satisfaction with advisers has grown over the past 12 months.

The SMSF sector now represents more than 30% of the $1.8 trillion superannuation industry in Australia and continues to grow, with assets rising 13% to $559 billion in the year to March 2014.

Positive market performance over the last year contributed to some of the increase but the research shows that advisers’ technical expertise is also playing a greater role in driving satisfaction.

The overall proportion of self-managed funds using a financial planner stopped its six-year decline and stabilised over the last year.

With 54% of SMSFs now open to tapping into advisers’ expertise, a clear opportunity exists for financial advisers. These levels of interest are the highest observed since Investment Trends began tracking this in 2009.

An estimated 286,000 self-managed funds have unmet advice needs they are willing to pay for.

Over the last year, SMSF trustees have been placing a greater premium on diversification and planners have been responsive to this.

A top priority for financial advisers specialising in self-managed funds is diversification. Seventy-seven per cent (up 10 percentage points) now say this is a key factor when selecting investments for their clients.

Michael Lovett, Vanguard’s head of adviser distribution, says the findings demonstrate the significant opportunity professional advisers have to expand their service offering.

“The challenge for advisers is to demonstrate that the value of good financial advice is much broader than investment selection,” he says.

The cost of advice remains an issue for investors.

However, when specifically asked how they would prefer to receive help from an adviser, a growing proportion of total self-managed fund investors (12% up from 7% last year) say they would prefer face-to-face communication even if it will cost more.

A larger proportion, 19%, is open to receiving advice over the phone and online.

When it comes to unmet advice needs, SMSFs are seeking ways to protect assets and income against market falls.

The 2014 research shows advisers and investors are increasingly focused on diversification.

More than a quarter (27%, up from 14%) of SMSFs who made substantial asset allocation changes did so to increase diversification. Concurrently, 77% of SMSF planners note diversification as their top investment priority up from 67%.

Over the past 12 months, planners estimate they placed 31% of new SMSF inflows in international assets, up from 25% in 2013. They also expect this will grow to 35% over the next 12 months.

“Ultimately, the value of a financial adviser is in their role as a behavioural coach. This involves understanding clients’ risk appetite and setting the strategic asset allocation for a client’s portfolio,” says Lovett.

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