The SMSF sector is a lucrative target for industry disruptors and will not be immune to the effects of trends being seen within the wealth management industry, says Bravura Solutions.
Speaking at The SMSF Association's 2015 Technical Conference, Bravura Solutions director of product management and strategy Darren Stevens said the growth of the SMSF sector, which now has funds under management of around $600 billion, means competitors will enter the market aggressively.
Mr Stevens said there are five key trends in the wealth management industry that will have an “enormous impact on SMSFs”.
The trends include generational change; hyper-personalisation and customer-centricity; the fintech revolution; cyber security and privacy; and social mobile analytics, cloud and the internet of things (SMACI).
“They are transforming the provision of platforms, products, services and advice across the wealth management sector and the SMSF sector will not be immune,” he said.
“Service providers that don’t adapt – and adapt quickly – run the risk of becoming irrelevant. As Bill Gates famously said, ‘banking is essential, banks are not’.”
Mr Stevens said there are several areas where threats to SMSF advisers and service providers will emerge.
“Industry and retail funds are establishing their versions of ‘SMSFs’ to halt the haemorrhaging of their larger accounts to the SMSF sector,” he said.
“Although there are mixed reports to date on their success, there is no doubt they are a challenge to the SMSF sector.”
The alliances that the retail and industry funds are forming with financial planning firms are also a threat to the SMSF sector, he said.
“Some providers are following the lead of ANZ that launched MoneyManager to provide their customers with an account aggregation service that provides a holistic view of their finances,” he said.
“ANZ has also stolen the march with its use of technology, partnering with IBM’s artificial intelligence solution, Watson, to develop automated intelligence statements of advice, a trend that can only accelerate in the years ahead.”
Mr Stevens said there is now a social networking robo-advice platform actively targeting the SMSF sector with a strong value proposition that assists self-directed investors to connect with their peers in a community of investors.
SMSF Association chief executive Andrea Slattery said Mr Stevens' warning about disruption to the SMSF sector was timely, but she was confident that SMSF specialists would be equal to the challenge.
Ms Slattery said both the Cooper Review in 2010 and the Financial System Inquiry highlighted the SMSF sector's ability to adapt and that she sees “no reason why this shouldn’t remain the case”.
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