Media,
word of mouth the new drivers of SMSF creation
Day
2 of the FSC Conference (#FSC13) and I find myself bouncing between the major
issues sessions on super and insurance, while my colleagues (@BlueChip_Comm and @madd_23n) attend the advice sessions.
The
super session right now is all about SMSFs. In another first for the FSC this
session was the first of its kind to focus on the fastest growing segment of
our national superannuation savings.
The
speakers are @ASlattery_SPAA, Recep Parker of Investment Trends and Michael
Chaaya from Corrs Chambers Westgarth.
It
was Recep's comments that, cheerily delivered, had my full attention. The mode
of delivery helped but it was the content that really had me - and should
attract the attention of anyone wanting to communicate to, or market to, SMSF
trustees, their accountants or their advisers.
Why
they do what they do
As
we all know, the primary driver for those who want an SMSF is control. SMSF
trustees become trustees because they get their statement, see poor
performance, look at fees & reach the (not unreasonable) conclusion that
they can make better investment decisions than the professional investment
managers.
Control
may be a primary driver but when Recep dug further into the Investment Trends
knowledge bank he offered some other reasons commonly cited as driving the set
up of an SMSF:
-
The ability to choose specific shares
- An
opportunity to save money on fees and
-
Disgruntlement with current super funds.
Who
are they?
The
much desired SMSF trustee is, according to Wealth Insights many years of
research, still "rich old (er) men". While the trustees are typically
pretty evenly split between the genders Recep suggested the decision makers are
far more likely to be male.
Where
is the money coming from?
Traditionally,
SMSFs were set up as a result of retail super fund members making the big
switch. Increasingly however the funds flow into the sector is coming from
industry funds.
Some
25% of last year's inflows came from industry super. Overall we're seeing
a massive outflow from APRA-regulated super funds into SMSFs. While more
than half of those SMSF start-ups are still instigated by financial advisers,
that's on the decline.
Media
and word of mouth are playing a far greater role.
What
happens next?
Although
accountants are still typically the instigators of SMSF set up, there is an
increasing cohort of self-directed investors setting up their own SMSF, and
running solo making best use of the lower cost, technologically-enabled
platforms now available.
And
the next wave of SMSF trustees are anything but "pale, male &
stale". They're younger, less likely to seek advice and more likely to
want to invest in property.
Investment
Trends suggest:
-
18% of adults with super wants to set up an SMSF in the future
- 2%
of super members plan to do so in the next 12 months
-
They're still driven to have more control, and equally disgruntled with
returns
-
But a third also want access to property
This
next generation of SMSF trustees are younger - in their 20s and 30s - and
represent the next wave.
With
SPAA's Andrea Slattery reminding us that 50% of the national retirement savings
sit in SMSFs, and bullish growth predictions, we're going to have to have to
get pretty good at talking to them.
Understanding
the demographic and their drives is a good starting point.
I'm attending the FSC Conference with Aideen McDonald (@BlueChip_Comm) and Bruce Madden (@madd_23n) on behalf of BlueChip. You can follow my commentary at @carden and www.cardencalder.com
