The research firm’s 2019 SMSF Accountant Report surveyed just under 5,000 investors and approximately 285 planners and found that an increasing number of those with SMSFs were using advisers other than financial planners for help running their fund.
By extrapolating the sample size of around 1,900 trustees to reflect the total SMSF population, the research found around 275,000 SMSFs would use an adviser other than a planner, while 215,000 would use a planner and 105,000 would not use any type of adviser.
The number of trustees using an adviser other than a planner had increased from 260,000 in 2018, while those using no adviser at all had decreased from 125,000 in 2018.
At the same time, the number of SMSFs who used a planner had increased slightly from 210,000 in 2018, but decreased significantly from 225,000 in 2017.
However, the research also noted that as SMSF trustees were turning away from financial planners, they had increasing unmet advice needs, with around 315,000 SMSFs needing advice they were not receiving in 2019, compared to 275,000 in 2018.
The most common areas trustees wanted advice in were pension strategies, estate planning and identifying undervalued assets, with pension strategies and identifying undervalued assets having almost doubled in demand since 2018.
Meanwhile, when it came to investment advice around SMSFs, planners with SMSF clients reported increasing interest from trustees around newer investment vehicles such as ETFs and listed investment companies.
The planners surveyed indicated that in the last 12 months, 12 per cent of the SMSF funds they had advised on had been invested in ETFs, up from 11 per cent in 2018 and 10 per cent in 2017.
At the same time, 6 per cent of advised funds in SMSFs had gone into LICs or REITs, up from 5 per cent in 2018, while 29 per cent of SMSF funds had been invested in managed funds, down from 32 per cent in 2018.
Cash was also gradually finding less favour among SMSF clients, with 19 per cent of advised funds having gone into cash in the last 12 months, compared to 21 per cent in 2018 and 22 per cent in 2017.
And what Advisers are they going to then ?
Probably unlicensed accountants.
If an SMSF member does not want advice on a pension they don’t have any compliance issues and much extra in the way of costs. Online legal services will facilitate the documentation.
That being the case, why is advice necessary at all for self-managed? Isn’t the concept more along the lines that these are sophisticated investors?
Maybe some of this issue can be settled by SMSF’s members signing a document along the lines of sophisticated investor. No comebacks on the advisors. Perhaps this would lower their fees and encourage them to get some form of guidance?
Naturally if they want to pay a fee for a full service, fine.
This is along the lines of doing a my.Gov tax return or seeing a tax agent.
If the client wants to be pointed in the right direction to get kick-started, well this is the grey area. ASIC’s own webpage and the ATO’s offer plenty of guidance. No fees charged, but no risks to them. Why should there be any risks if someone asks for this level of help with no fee or low fee. If the government were to ask, many people would say this is what they want. The fees are the killer – not everyone wants Rolls Royce Service.
What doesn’t add up is more or less accountants need a license to set up a pension or a new fund but often this is a decision made by the Trustees on the basis of they need money to live off or they want an SMSF for a specific purpose. There should be an ASIC issued waiver of advice form where accountants can act on a clients orders, we are not advisers, we don’t profess to be and we shouldn’t therefore be second Trustee actions.
“We are not advisers…” you say, yet accountants class themselves as the “trusted professional”… If there is to be a licensing system for one group providing information to consumers then it needs to be applied for all groups doing that activity. Agreed that the bar for being an adviser has been way too low fro way too long but that doesnt mean that one group should be punished while another gets an easy ride.