Advisers urged to consider younger SMSFs in advice service offering
With the average age for establishing an SMSF gradually dropping over the years, an SMSF services provider says it’s important advisers consider the needs of younger investors in their service offering.
The ATO’s recently released SMSF statistical overview for 2019-20 indicates that the median age of newly established funds is 46 years, with 46.2 per cent of members below the age of 45 when setting up their fund.
This represents a significant increase in younger trustees setting up funds from the 2011-12 income year when only 15.6 per cent of new members were below the age of 45.
With younger investors now setting up SMSFs, SMSF services provider Stake Super, whose average client is around 32 years, said it’s important advisers understand what younger SMSF clients are looking for.
Stake Super chief executive Matt Leibowitz said younger SMSF trustees want a completely digital offering, as little paperwork as possible and have a much more global focus with their investments.
“Younger investors have a more global set, they follow the trends from overseas, they’re aware of what’s happening overseas and their culture is sort of dictated by overseas versus Australia,” said Mr Leibowitz.
“Historically it wasn’t even available so older investors were never really given the opportunity but younger investors can now invest overseas so I think advisers need to realise the game has changed.”
Mr Leibowitz said younger SMSF clients are not as familiar with investments such as the big banks and mining companies like BHP and Rio Tinto.
“They’re the names of the past and I think if you’re going to attract younger people to the investment market you need to understand what they’re looking at, [companies like] Spotify, Dropbox, Square, AfterPay and Disney,” he said.
Based on data collected from the Stake Super’s investment platform, some of the top stocks invested in by their SMSF users include NVIDIA Corporation, Microsoft, Tesla, Amazon and Apple.
“You need to have your portfolio constructed towards what people understand, because otherwise it’s just some three letter code they don’t understand,” said Mr Leibowitz.
He noted that the main reasons for setting up an SMSF are very similar for younger SMSF trustees as they are for the rest of the SMSF population, with trustees wanting greater control of their investments and access to investments that are not available in the APRA-regulated funds.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
