AMP: A keen player in a booming sector
AMP SMSF managing director Paul Sainsbury speaks to Aleks Vickovich about the success of the company’s push into SMSFs, its mass advertising campaign and the increasing importance of professional advice.
Q: AMP has launched a highly visible advertising campaign for its SMSF business. What is the strategic thinking behind the campaign?
A: The purpose was to position AMP as an expert in the marketplace to provide solutions to both advisers and to SMSF trustees. The sector is growing very quickly and our advisers across our networks are looking for solutions in this space and we also know that trustees don’t necessarily want to go it alone and we want them to know there is a trusted large institution there to support their drive into the sector.
Q: Do you think AMP’s push into SMSFs has helped up the profile and credibility of the sector among consumers?
A: Very much so. We need to make sure that trustees get the support, guidance and education required to manage their own super. We have to remember that we’re talking about peoples’ retirement savings so it’s really important that trustees have the confidence with the company they are partnering with and have the assurance that they are going to be there in the long run.
Q: What sort of results has the campaign produced so far?
A: With the sector growing at the rate it is, we were already seeing a lot of people engaged. We’ve had tremendous interest from the advertising, including very significant activity on the website – a lot of people looking at our educative content – our videos, tutorials etc. – and asking questions through our online portal to find out more about SMSFs. We couldn’t be happier with how it’s going.
Q: How do you turn that interest and activity into actual AMP SMSF customers?
A: We are strong advocates of advice for self-managed super. In fact, we think it’s a misnomer that SMSF trustees are not looking for advice. We strongly advocate that trustees do get advice. At the end of the day there is a cohort of trustees that will want to be completely self-directed and so will want to make their own decisions about what’s right for them – we think we have a role to play in that scenario also through general educational services, but we do strongly advocate some form of professional advice.
Q: What is the yardstick AMP SMSF uses in terms of the necessary assets a prospective trustee needs before setting up an SMSF?
A: We support the Australian Securities and Investments Commission’s guidance that a quarter of a million [$250,000] is an appropriate level, but at the same time we think there are other factors in whether it might be right for an individual to set up an SMSF that go beyond dollar value, which is why we think advice is so important. For example, someone may have assets vastly exceeding $250,000 but still may not be suited to an SMSF and equally, a small to micro business that is able to use its super to purchase the industrial unit it operates from may be in a position to set up an SMSF with less than $250,000. So this is why advice is so important – it depends on the case.
Q: How does the growth of the AMP SMSF business sit within the broader strategic direction of the company?
A: Well the integration process [with AXA] is now fully complete and I think the SMSF business unit sits really well with both AFS [AMP Financial Services] and AMP Capital. The SMSF unit brings accounting and tax services to the customer while AFS can bring wrap and banking products or insurance opportunities to trustees either directly if there is no adviser or through an adviser if such a relationship exist. In terms of AMP Capital, we are working with AMP Capital around the establishment of specialist investment funds to appeal to trustees. It’s a great example of how the three businesses can work together for trustees.
Q: Does the growth of AMP SMSF present any threat to other sections of the business such as the retail fund offering?
A: We see SMSF as an adjacency rather than a substitute to our existing business. It’s surprising how many trustees elect the convenience of a wrap platform, for example, within their fund due largely to the reporting element. That is, where they have managed investments at all. In some cases, the investment strategy of the fund doesn’t lend itself to a wrap. But in general it’s about adjacency and giving trustees the very wide range of financial services and products we offer rather than any substitution. Admittedly there are people that are actually moving from wrap platforms to an SMSF, but they are not necessarily at odds.
Q: Do you think there’s a risk that SMSFs will become too popular?
A: Roughly three per cent of the accounts in Australia are self-managed super funds so it doesn’t feel to me that we have reached market saturation in any stretch of the imagination. I think as balances continue to grow and people become more in-tune with their long-term super savings, they will continue to be attracted to self-managed super. Whether or not that will plateau at some point in the future I don’t know, but from AMP’s point of view we find ourselves a relatively small player in a large market and that market itself is growing so we think there is tremendous upside.
Q: The AMP advertising campaign is clearly aimed at the mass consumer market. Is setting up an SMSF realistically something that the average Australian worker can aspire to and manage responsibly?
A: I suppose I have the view that your average mum and dad investors would probably get better value out of focusing on the investment platforms that they have already got. If they want diversification in their portfolio that a retail fund doesn’t offer them then I guess SMSFs are an appropriate thing to consider. But they have to be willing and able to put in the time to manage the fund and they have to be very aware that as trustee they would be responsible for the compliance of the fund. There’s great capacity to help trustees but ultimately it’s their responsibility, that’s why advice becomes so important.