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Boosting your bottom line with Gen Y clients

By Pete Pennicott
25 August 2015 — 3 minute read

Targeting younger superannuants who are appropriate candidates for SMSFs can help practitioners build long-lasting and lucrative relationships.

The attraction of SMSFs for Generation Y

It makes sense that anyone looking for greater self-determination is attracted to the perceived freedoms offered by a SMSF.

SMSF practitioners who are well positioned to offer the necessary guidance and coaching in this field should therefore be looking to benefit from the longer-term benefits of these types of clients. In short, the time is right to look more closely at how our professions and related service offerings can better cater to this emerging client base.

Are we sure younger generations want SMSFs?

There are a number of developments and shifts that support the idea that SMSFs are exactly what younger generations could be looking for. The knock on SMSFs was that you needed at least $200,000 to justify such a move and that the machinations of these schemes were shrouded in a dark veil of complexity and high costs. To an extent these funds became a status symbol as opposed to a way by which one might take control of securing one’s future.

But there’s a lot more for interested parties to consider than just the bottom line of their superannuation balance. With sharply reduced costs of SMSF service providers over the last five years, these wonderful structures are more accessible. Fixed set-up costs can be amortized over the longest period possible and, instead of waiting until age 60 and spreading this over 20-30 years, this can be spread over 50-60 years.

Here’s what we do know about the Gen Y demographic:

1. They will be contributing longer and at a higher rate than any other demographic before them
2. This will not require a quantum shift in thinking, as the mandatory superannuation guarantee has been in force for their entire working lives
3. Further, the benefits of fund accumulation have passed into the realm of universal truth given the wide acceptance that life expectancies will continue to head north.
4. Preservation age is far too far away to give serious thought to, so the search is on to do something meaningful with superannuation balances before that time.

Younger Australians, namely Gen Y, will make up the next and perhaps biggest wave of SMSF participants.

Member demographic table – age ranges

Age ranges Total

<25 1.30%
25–34 4.10%
35–44 12.90%
45–54 24.00%
55–64 32.10%
>64 25.70%
Total 100%

Source: ATO Self-managed super fund statistical report – March 2015

The Gen Y market represents only five per cent of trustees but, ignited by a greater understanding of the benefits and a demystification of parameters, this could be the long fuse leading to the big bang.

Your role in their fulfilment

You’ve heard it said now for a number of years across a number of business and market segments: clients/customers are more complex and more nuanced than ever before. They like to know more about the products they purchase; transparency is king and control is the jewel in the crown.

That said, Gen Y clients probably don’t want to spend all their time expanding their knowledge of SMSFs, therefore advisers need to adopt more of a coaching role rather than leaving them to ‘sink or swim’.

The latest report by the SMSF Association described this new breed of trustees as being open to an advice relationship and seeing SMSFs as not so much 'a DIY' option but rather a ‘help me-do-it’ solution to superannuation savings.

After all, the notion of a ‘private’ superannuation fund which provides a level of flexibility, control and ownership not afforded by the plethora of industry, retail and wrap solutions is more appealing to Gen Y. In addition, certain clients will see this as an appealing opportunity to gain a deeper understanding of investments and learn a skill applicable to their own savings scenarios.

Engagement is the key, as is the case in any ‘work with’ or coaching endeavour

While conventional wisdom has long held that Gen Y might be more trouble than they’re worth in terms of dollars and cents via fee revenue, it makes sense to take a second look. Close to two thirds (65.7 per cent) of advisers are seeing a growing demand for SMSF services from 31-40 year olds and more than one in five (21.7 per cent) are seeing an increase in demand from 20-30 year olds. Given Gen Y’s years of earning potential, pay increases and higher contributions laying before them, the time seems right to engage and coach these clients.


I began my own SMSF adventure in my late 20s because I liked the idea of having flexibility and a modicum of control over my investments. There were obviously ups and downs, but time was definitely on my side. I won’t presume to have been typical of those in my age group, but the results are certainly indicative of what can be achieved by a Gen Y SMSF convert. As a result, my business now owns one of the office spaces from which we operate thanks to putting my retirement funds to work earlier. Options and possibilities such as these are the benefits that really resonate with my market segment.

Why would we as advisers invest time and effort in actively encouraging young people to look at SMSF as an option?

Inspiring younger superannuants who fit the bill to explore SMSF increases engagement and builds long-lasting relationships built on trust and mutual benefit.

Pete Pennicott, practice principal, Pekada


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