SMSFs turn to advisers amid market uncertainty
More SMSF trustees are seeking financial advice due to the uncertain market conditions of 2023, according to a leading wholesale broker.
AUSIEX said there has been a rebound in the number of SMSFs driven by advised clients while the number of self-directed investors opening SMSF accounts has declined.
Generation X – those likely to inherit the bulk of the intergenerational wealth transfer – were chief among the advised investors opening new SMSF accounts, with their share of new accounts rising by more than 14 per cent year-on-year, while the share of new Baby Boomer accounts rose by just 2.1 per cent.
Chris Hill, national manager of strategic relationships at AUSIEX, said some investors appear to be reevaluating the effort associated with self-administering an SMSF, presenting a significant business opportunity to planners.
The share of new accounts opened by advisers for younger Millennials born between 1981 and 1996 rose 3.85 per cent by comparison, though were significantly fewer in numerical terms.
In contrast, the number of new accounts created for self-directed SMSF investors across Generation X, Millennials and the Interwar generation (those born between 1928 and 1945) all fell sharply year-on-year, raising the possibility some are now serviced by advisers or via other super funds.
Overall trading volumes among SMSFs were subdued over the year as investors opted for quality and income-generating assets, likely to counter market volatility.
This was particularly evident in self-directed SMSFs, though trading volumes for advised SMSFs increased their trading volume (number of trades) by 1.4 per cent (with actual traded value up 6 per cent).
Advised SMSFs also showed a preference for a broader range of securities than self-directed peers, most notably for exchange-traded funds (ETFs) as advisers appeared to diversify and minimise volatility from their portfolios
“The complexity of managing an SMSF portfolio underscores not just the importance of professional counsel, but also the need for advisory practices to continually invest in technology that maximises operational and trading efficiencies,” Hill said.
“It’s clear the ‘DIY nest egg’ remains popular and that advisers who invest in technology will maintain a competitive advantage when serving this market segment.”
