Taxpayers Australia’s members, who include tax practitioners and superannuation professionals, have found that their clients are reluctant to seek financial advice, and are increasingly opting to “go it alone” with their financial decisions, Taxpayers Australia’s Reece Agland told SMSF Adviser.
Mr Agland cited the Commonwealth Bank financial planning scandal as a key contributor to trustees changing their attitudes.
In addition, some trustees have found they are being pushed into life insurance products because financial planners can still receive commissions from these products post-FOFA, Mr Agland said.
The issue is purely related to financial planners, Mr Agland said, with accountants still holding the trusted relationship with their trustee clients – in part due to the transparency of their fees.
“In the long term, it’s a problem. If [trustees] are just going to stick to what they know they might miss out on opportunities that a financial planner can tell them about,” Mr Agland said.
“That’s the risk, that they’ll just keep to simple products which will give decent returns but not really accelerate their super as much as they could.
“This could be to the long-term performance detriment of many SMSFs.”
Also speaking to SMSF Adviser, Quantum Financial principal Tim Mackay said SMSF trustees are specifically getting “spooked” on advice from institutions that have been implicated in recent financial advice scandals.
Quantum Financial, which is independently owned, has experienced higher demand as a result, Mr Mackay said.
“A fair few of those clients are refugees fleeing from those financial institutions that have been implicated,” Mr Mackay said.
Why are so many people so worried about SMSF Trustees? is it because they are doing so well on their own?
All the research shows that financial planners have poor penetration in the SMSF market, less than 10%.
Give Aussies a bit of credit for understanding what they want and why. All the SMSF trustees I know are well informed, educated and enjoy managing their own super and investments. Most trustees don’t want or need overpriced hand-holding by financial advisers.
However, financial advisers do still fill an important role, bringing financial literacy to the remainder of the huddled masses, with their home-spun folksy investment advice.
Hardly a surprise.
Whilst a trustee may “miss out on opportunities that a financial planner can tell them about” what they won’t miss is the absence of fees, charges and the spruiking of products by not using a financial planner.
SO trustess will not have the supercharged returns. Just the returns from good solid steady investment principles – something like what they would get from good public offer funds – without the costs and with full control and all the other benefits that a SMSF has over a public offer fund.
No wonder everyone is finally realising why SMSF’s are such a good idea.
If this is accurate I’m not surprised, but it is hardly a threat or a wake-up call. In the end, superior financial advisers (and proactive accountants) will always continue to win the confidence and trust of SMSF trustees. This is an opportunity.
Is this a surprise? Absolutely not. The only surprise is that it took so long for those trustees to come to this conclusion. And for the long term detriment it is better to have 50% of something than 100% of nothing.
I’m surprised that there are no comments to this posting. Cat got your tongues?