Raising the bar in SMSF advice

It’s about 55 per cent of our revenue. There is a little bit of what we call straight non-managed – about 5 to 10 per cent – around 35 to 40 per cent is risk and the rest is self-managed. But that’s revenue, not in [terms of] the number of clients. From that perspective we’re looking at about 25 to 30 per cent of our clients.

What does your SMSF client base look like?

It’s interesting. We’re getting a lot more younger clients talking to us – those in their late 30s who want more independence and more control over their retirement. We’re finding that is becoming a lot more popular. We have more clients in SMSFs in their mid-40s through to 60, and we’ve got retirees as well. But the bulk of our client base, full stop, is very much wealth accumulators.

You got involved in the SMSF sector quite early on in its history. How has the space evolved?

[A fellow financial adviser told] me that self-managed was the way to go back in the early 2000s and that’s when I was introduced to them and did a [training] course on them. From there, through discussion groups, we formed what is now known as SPAA.

It was very much a group of professionals at the time who thought ‘we really needed to put together an industry body’ because the FPA and the AFA at the time didn’t really deal with self-managed. So SPAA is now 10 and a half years old and I’ve been a member since inception. From that point of view, I think SPAA – from that early beginning – has always very much wanted to adopt high levels of professionalism and high levels of education.

I think that’s where I have come from in terms of wanting to make sure we raise the bar, raise the standard of education within our industry. You see too many rogues out there that just ‘flog a product’ in terms of the property market, taking trustees for a ride. I think the more we can increase the level of education within people who work in the industry then the better off we’re going to be in terms of educating consumers [to understand] that they need to seek a professional.

The SMSF sector has continued to grow. Do you think that projection is likely to taper off soon?

I think it will just get bigger. We continually get a demand from people wanting to know more about self-managed funds. If they can be done cost-effectively – smaller account balances generally can’t be – but if they can be done cost-effectively, then clients are a lot more inclined to go down the self-managed path versus a wrap account or a master trust.

They want that perceived ability to say ‘well, I do run this fund and I can control what goes in it’. Even though they could potentially have a lot of the same investments in a wrap account, it’s just that perceived difference and for those larger account balances there is an economy of scale that you just don’t get in the wrap accounts.

Some professionals in the industry have been quite vocal about creating ‘barriers to entry’ for consumers wanting an SMSF. What are your thoughts?

I don’t have an issue beyond making sure that the right level of funds is there. We always suggest clients don’t even consider it below $250,000. Any dollar amount under that and there needs to be a really good reason why you would set up a self-managed fund, because the fixed costs are too high.

You’ve got set-up fees, such as accounting and audit fees, so it doesn’t matter whether you’ve got a million dollar fund or a hundred thousand dollar fund, it’s still going to be the same. Even if we just do a bare minimum scenario fee, you don’t want to be eating up too high a percentage of the fund. So therefore the lower and smaller scale funds just don’t have that cost efficiency that large balances do.

What sets JBS Financial Strategists apart as a business?

I think it’s our client engagement. We do a lot of work with social media and I do a lot of workshops with women in business on how to use social media effectively within business. And so it’s that, it’s our team and it’s client engagement that I think makes us unique. Our clients love that they can ring and I’ll speak to them and know that they’ve had a birthday or I know that they’ve been overseas or I know that they’ve had a kid.

So it’s not just about keeping great [client relationships management]; it’s also knowing what the clients have got and why they’ve got it. Building a relationship with clients does make it a lot harder for them to leave.

You’re 2013’s AFA Adviser of the Year – what causes are you looking to put on the industry’s agenda?

Great advice, and I’m very much an advocate for great advice for more Australians. One of the things that I’ve been really trying to work towards over the last 12 months is advice via social media because I really believe that social media can help champion the cause of good quality advice. There are great advisers out there who do provide this for their clients.

Also, [to advance] women in business. The more we can help give women the confidence to do what they want to do then I think we’re going to be better off.

I still go to functions where I’m in the minority … but hopefully that’s changing and hopefully we can educate and inspire women to take control of their financial circumstances. I like to think that if I can make a little bit of a difference to somebody and help them with something, then I’ve done my job.