SMSFs not that rewarding for planners
The long-anticipated rise in revenue coming from the self-managed super fund (SMSF) client base is not happening just yet for financial planners, according to new research by Investment Trends.
According to the Investment Trends Self Managed Super Funds: Planner Report, the surveyed advisers derived 21 per cent of their revenue from SMSF clients, despite their rough estimates from three years ago being much higher at 33 per cent.
"Advisers have been anticipating an increase in the role SMSFs play within their businesses for a number of years, but this has not materialised for some," said senior investment analyst Recep Peker.
In fact, Peker said, the crucial SMSF market has proved to be a challenge for financial planners, with many losing ground and deriving a lower proportion of their overall revenue from this client segment.
Only a quarter of the 589 surveyed planners were regarded as SMSF specialists, servicing 20 or more clients in this space.
Peker said non-specialist planners were struggling with the administration challenges, client education about trustee responsibilities, and competition from accountants.
"What are specialists doing differently? Specialists are more likely to have relationships with several accounting firms for referrals," Peker said. "By adopting a more defensive/income oriented investment approach, they are more in tune with their clients' investment needs, and they are more involved in clients' share-trading activities."
SMSFs are the fastest-growing segment of the superannuation industry and the market of choice for planners to tap into.
Even large financial services institutions have been making their move into this space, with AMP acquiring SMSF administrator Cavendish, and the Commonwealth Bank acquiring Count Financial.
"We are also still experiencing significant pressure on fees," said Peker. "Planners are responding to these cost pressures, and have cut ongoing SMSF fees by 5 per cent since the last study to $3,800 per annum."
Recommended for you
With regional and rural suburbs exhibiting high spare capacity to invest, Money Management speaks to three regional advisers on the opportunities beyond the major cities and the importance of a strong network.
Platform consolidation is expected to accelerate among financial advisers this year, as software company Finura pinpoints which two platforms are set to be the winners, thanks to this trend.
The software provider has made several appointments in its APAC wealth propositions team, with a focus on driving growth across digital advice, Xplan and strategic partnerships.
The platform has announced it plans to close its Xplore managed discretionary account service in 2026 which holds $2 billion in funds under administration.
