SMSF market ripe for digital advice
Financial advisers should prioritise low-cost digital advice solutions in order to capture the expanding crowd of unadvised SMSF investors, says Saxo Markets Australia.
In a recent opinion piece, Saxo Markets, head of institutional partnerships Gaye Anable explained that while there is significant demand for financial advice from SMSF trustees, the supply of advice in its current form does not match demand for lower cost advice.
Ms Anable noted that while there was a four per cent increase in the number of SMSF accounts in the year to June 2022, the 2022 SMSF Investor Report found that the percentage of advised SMSFs had fallen to 29 per cent.
This is largely due to the advice in Australia not being fit for purpose, she said.
Despite the release of the Quality of Advice Review (QAR), Ms Anable said there is still no clear pathway towards an advice sector that is simpler, more affordable and more accessible.
“One of the key areas that the report did address through its recommendations was making the provision of digital advice easier. For example, the recommendation to remove safe harbour and disclosure obligations are steps in the right direction to enabling mass market adoption of low-cost advice, including for SMSF investors.”
“To capture the burgeoning crowd of SMSF investors, advisers and other financial intermediaries should prioritise low-cost digital advice options that offer opportunities to scale through greater process automation, while also delivering the greater flexibility and customisation needed to meet evolving client demand.”
SMSF professionals working in the advice space need simple yet sophisticated tools that can help them achieve scale, automation and effectiveness, she said.
“Tools that allow them to be nimble in servicing SMSF clients anywhere and anytime, be able to serve more SMSF clients, and provide quality financial planning and investment advice. This is still the hallmark of an advisory business that requires the human element of understanding personal financial requirements.”
“A modern adviser’s digital toolset would include the ability to monitor multiple client portfolios and distribute news, insights, analytics and reports to clients via apps, would provide direct access to global multi-asset markets. It should also help clients digitally implement and maintain SMSFs based on personal goals and objectives via smart solutions.”
Ms Anable said it’s important that any digital advice solution is tailored to individuals.
“A one-size-fits-all approach to investment management does not suffice. Being able to charge fees scaled to the level of service provided within each tool set is also key to the onboarding, retention, and growth of SMSF client relationships.”
“SMSF investors are ripe for the picking for advisers as many are in the wealth accumulation phase and still busy with work and life. They just require the right advice to set up an investment strategy that ensures their SMSF doesn’t need constant attention and oversight.”