Limited recourse borrowing arrangements (LRBAs) are likely to continue growing in popularity among the under 50s in coming years, creating a golden opportunity for younger advisers, one platform provider has said.
Director of Now Infinity Grant Abbott predicted Generation X will continue to embrace LRBAs in coming years.
“LRBAs are the biggest thing for the next generation,” he said. “Guys under 50, that's our big market.”
However, he warned there were risks involved in moving older clients into LRBA situations.
“For my generation, the baby boomers, you have to be very careful about it,” he said.
Mr Abbott predicted this shift towards LBRAs, and SMSFs more generally, would create an opportunity for younger advisers to expand their practices.
“There is $560 billion sitting in SMSFs right now. That's going to go to a trillion by 2020,” Mr Abbott said.
“Most of that money is going to be coming from Gen X and advisers under 50 are going to be setting up their funds.”
In his view, young people would follow the path forged by the baby boomers and set up SMSFs in growing numbers.
“If you do the equation, there is $680 billion sitting in accumulation accounts for Generation Xs at the moment,” he said.
“If you see how many baby boomers moved over to SMSFs, you'd say at least $300 billion is going to move from retail and industry over into the SMSFs.”
He suggested these trends would benefit advisers willing to work in the SMSF space.
“That presents a great opportunity for many of you, inside your business, to actually start to focus heavily on that area,” he said.
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