Demographic change is having an impact on both superannuation and self-managed super funds, with researchers burning the midnight oil to stay ahead of the trend.

According to a new study from Macquarie Bank and the SMSF Professionals’ Association of Australia (SPAA), the profile of SMSF investors is dramatically evolving and financial planners and accountants servicing this demand will need to act quickly.

SPAA chief executive Andrea Slattery said SMSF professionals would need to adapt their advice models to meet the different needs of this growing sector of investors.

The report found that 46 per cent of recent SMSF investors are under the age of 30 and one in five are females who still live at home with one or more parents, challenging the misconception that it is only older Australians who are actively managing their superannuation.

Macquarie and SPAA argue that this strongly indicates that SMSFs are being considered and set up by people with a very different profile to traditional SMSF investors.

An engaging family affair

Macquarie Bank’s analytics insights manager, Gary Lembit, says the younger generation in particular is becoming more engaged and that SMSF management is very much a family affair.

“As we are aware, high property prices are making it a real challenge for young Australians to enter the housing market and this is one of the main reasons why adult children are staying at home for longer. It is also encouraging them to think about where else to invest their money, so they are building their wealth for the future, and of course, retirement,” he said.

“Actively managing an SMSF, for many investors, means engaging other family members and involving them not only in the decision-making, but also in the ongoing monitoring, reviewing and planning of the SMSF. It is therefore important for SMSF professionals to involve family members in the advice process.”

More likely to save and love advice

The study revealed some interesting differences between current and intending SMSF and non-SMSF investors.

Predictably, it found that SMSF investors tend to be more purposeful in their financial behaviour and are constantly striving to benefit their families financially in the long-term. Both current and intending SMSF investors are more likely to save as much as they can, with two in three intending investors saying they save as much as possible.

Recent investors (60 per cent) and intending investors (63 per cent) are also likely to seek out ways to earn more, with intending investors particularly likely to work multiple jobs (31 per cent).

Slattery (right) said these findings confirm that SMSF investors take an active role in managing their investments from day-to-day and an active role in their savings and future retirement plans.

“Having made the decision to set up an SMSF to have more control and choice over their investments, it is not surprising that SMSF investors are highly engaged and informed,” she said.

“But what is not surprising is this engagement is manifested both in a tendency to actively monitor the performance of their portfolios and to take positive actions to enhance that performance.

“As a result, they have greater advice needs than other investors and a higher propensity to seek out and value advice. The encouraging news for SMSF professionals is that SMSF investors love experts so there is a real opportunity for them to demonstrate the value they can add, in the knowledge that their clients will be very open to receiving their advice. This is the message we have been putting to the market and this research supports it.”

In related news, the Association of Superannuation Funds of Australia (ASFA) has launched a new online survey to gather views from the broader community on how the super system should be evolved to accommodate for the demographic changes Australia’s population will experience over the coming decades.

The Association of Superannuation Funds of Australia chief executive Pauline Vamos says with an ageing population, more retirees living longer and a maturing system there is a growing need to plan for how these factors will impact on retirement outcomes in the longer term.

“This is a conversation that needs to be started now so we can make the adjustments necessary to ensure we have a system which is sustainable into the future.”

Andrew Starke - Editor - Professional Planner Magazine
22nd July 2013
Source:  Professional Planner    www.professionalplanner.com.au