SMSF’s turn to advisers amid market uncertainty

Chris Hill

The uncertain market conditions of 2023 triggered a rebound in the number of self managed superannuation funds (SMSFs) seeking financial advice, according to AUSIEX, Australia’s leading wholesale broker.

Analysing a large cohort of its data, AUSIEX found new SMSF account openings were driven by advised clients as the number of self-directed investors opening SMSF accounts declined.

Generation X – those likely to inherit the bulk of the intergenerational wealth transfer – were chief among the advised investors opening new SMSF accounts in an indication of their growing financial clout.

Their share of new accounts rose by more than 14% year on year while the share of new Baby Boomer accounts rose by a far more modest 2.1%.

“Some investors appear to be reevaluating the effort associated with self-administering an SMSF, presenting a significant business opportunity to planners,” said Chris Hill, National Manager, Strategic Relationships at AUSIEX.

The share of new accounts opened by advisers for younger Millennials born between 1981 and 1996 rose 3.85% by comparison, though were significantly fewer in numerical terms.

In stark contrast, the number of new accounts created for self-directed SMSF investors across Generation X, Millennials and the Interwar generation all fell sharply year on year, raising the possibility some are now serviced by advisers or via other superannuation funds.

Quality wins out

Overall trading volumes among SMSFs were subdued over the year as investors opted for quality and income generating assets, likely to counter market volatility.

This was particularly evident in self-directed SMSFs, though trading volumes for advised SMSFs actually increased their trading volume (number of trades) by 1.4% (with actual traded value up a robust 6%).

Advised SMSFs also showed a preference for a broader range of securities than self-directed peers, most notably for exchange traded funds (ETFs) as advisers appeared to diversify and minimise volatility from their portfolios.

 “The complexity of managing a SMSF portfolio underscores not just the importance of professional counsel – but also the need for advisory practices to continually invest in technology that maximises operational and trading efficiencies,” said Chris Hill.

“It’s clear the ‘DIY nest egg’ remains popular and that advisers who invest in technology will maintain a competitive advantage when serving this market segment.”