Communicating to SMSFs and their advisers and accountants

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