Planners to cash in on SMSFs

Financial advisers have embraced the growth in self-managed superannuation funds (SMSFs) with recent research showing just under half of them, 46 per cent, see it as a significant opportunity to add value to their practices.

The 2006 AMP Capital Investors/Investment Trends SMSF Planner Report, which surveyed 327 financial planners, also revealed 32 per cent of respondents considered the rise in SMSFs as a small business opportunity while only 9 per cent felt the trend would have no impact at all.

The study classified those advisers with greater than 20 SMSF clients as specialists in the field and found on average these planners had 50 per cent higher funds under advice compared to the entire advisory industry, and achieved superior fund inflows of 44 per cent in the past year.

The SMSF specialist planners also tended to have more regular contact with their SMSF clients and provided them with services of a more specific nature.

“When we looked at what those discussions were about we found that they tended to be a lot more substantive issues-based discussions,” Investment Trends director Mark Johnston said.

“The specialists tended to make a high proportion of investment recommendations about off-platform products. They also tended to advise on a wider range of products, so they’re more likely to be providing advice say on direct equities and unlisted property. They’re not as focused on the traditional core managed funds investments,” Johnston explained.

According to Johnston, the advice given falls into line with SMSF clients’ preference for control over their investment activities evidenced by their greater propensity for direct share trading.

In response to this investment approach demonstrated by people with an SMSF, AMP Capital Investors has developed a range of managed funds, similar to the firm’s China Fund launched last year, to suit these investors’ needs.

The fund manager intends to release these products into the market later in the year.

“One of the main drivers for this particular group to use managed funds is the ability to access investment opportunities they can’t do themselves. So a product like the China Fund is really about giving them an investment they want to do but can’t easily replicate,” Johnston said.

AMP Capital Investors head of private clients Giles Craig clarified the new products would have wider appeal than just the SMSF market.

“We’re not saying these products are self-managed super fund products…What we’re saying is this is targeted at investors who have the mind set of a self-managed super fund investor,” he said.