Like many professionals I attend various events to learn from and network with my colleagues whether it be in person or through webinars. In addition to this I scan through many bits and bobs of useful information and useless repetitive rubbish that seems to fill my inbox on a daily basis and that I regard as ‘noise’ for the sake of making ‘noise’ and nothing more.
Recently I received a LinkedIn message from Graham Hand the Managing Editor of Cuffelinks, which is a weekly investment newsletter. I read his note with interest and clicked the link to find out more. I proceed to go onto his website where I quickly scanned a number of the recent articles which to my bleary eyed surprise are in fact very good. One article in particular that caught my eye was, How are SMSFs and their trustees changing? By Graham Hand himself. It is an excellent article with incorporated research from Vanguard/Investment Trends 2017 SMSF Report. This article resonated with me because for many years I have discussed with a number of financial planners and accountants the need to introduce diversified services into their practices such as education for alternative investments by experienced and licensed providers to value add their offerings to their clients. Needless to say this piece of encouragement for diversification has fallen on deaf ears yet the statistics in this article show that ‘the use of financial advisers (defined to include ‘accountants for financial advice’ and ‘superannuation consultants’) by SMSF trustees has fallen steadily over the last 10 years from 54% in 2008 to 38% in 2017.’
From the SMSF trustees that I speak with being family, friends and colleagues with the majority being Baby Boomers of which I am one, they believe that they do not need financial planning advise because they believe that they have enough general knowledge and experience to control their own financial destinies without the additional fees. They want the independence associated with buying and selling shares, owning rental properties, using independent fund or property managers and utilizing disposable cash to do what they wish, such as investing it in education to broaden their own knowledge of diversification opportunities. This outlook is supported in the Report in that, ‘the top barriers to seeking advice were lack of confidence in advisers’ expertise (27%), cost (23%), limited range of advice (21%), previous poor experiences (21%) and lack of ethics (17%).’They believe that the accounting advice received is ‘adequate’ to structure their financial affairs so why spend time and money to engage a financial planner.
Additional statistics from this article are also troubling in that, ‘among financial planners, 20% identify as SMSF specialists, 49% SMSF generalists and 31% as non SMSF planners’. So this research is telling us that 80% of financial planners are pushing paper! No wonder the SMSF trustees prefer the DIY method as opposed to using financial planners and potentially one of the reasons why the use of financial planners is falling steadily and in my very humble opinion will continue to do so unless there is significant change with the culture within these firms to provide education for investment diversification.
There are a number of points that I believe should be explored from the summary of the 2017 SMSF Report and one of them is that ‘service providers have an opportunity to cover significant unmet needs, with investment selection and regulatory change the most prominent uncertainties. There is a large appetite for education and advice about strategy but not products.’ Another point that goes hand in hand with this one is that ‘trustees citing difficulties finding advisers who can meet all their needs’. To be fair financial planners can only provide so much information about different investment opportunities, so why don’t the 80% of financial planners engage external experienced and licensed specialists to provide diversified education for alternative investments to assist their clients with expanding their knowledge. Perhaps it’s time for financial planners to think outside the box and incorporate cutting edge education by tapping into external experienced and licensed providers of alternative investments to value add to their current services being offered to clients.
From the SMSF trustees that I speak with being family, friends and colleagues with the majority being Baby Boomers of which I am one, they believe that they do not need financial planning advise because they believe that they have enough general knowledge and experience to control their own financial destinies without the additional fees. They want the independence associated with buying and selling shares, owning rental properties, using independent fund or property managers and utilizing disposable cash to do what they wish, such as investing it in education to broaden their own knowledge of diversification opportunities. This outlook is supported in the Report in that, ‘the top barriers to seeking advice were lack of confidence in advisers’ expertise (27%), cost (23%), limited range of advice (21%), previous poor experiences (21%) and lack of ethics (17%).’They believe that the accounting advice received is ‘adequate’ to structure their financial affairs so why spend time and money to engage a financial planner.
Additional statistics from this article are also troubling in that, ‘among financial planners, 20% identify as SMSF specialists, 49% SMSF generalists and 31% as non SMSF planners’. So this research is telling us that 80% of financial planners are pushing paper! No wonder the SMSF trustees prefer the DIY method as opposed to using financial planners and potentially one of the reasons why the use of financial planners is falling steadily and in my very humble opinion will continue to do so unless there is significant change with the culture within these firms to provide education for investment diversification.
There are a number of points that I believe should be explored from the summary of the 2017 SMSF Report and one of them is that ‘service providers have an opportunity to cover significant unmet needs, with investment selection and regulatory change the most prominent uncertainties. There is a large appetite for education and advice about strategy but not products.’ Another point that goes hand in hand with this one is that ‘trustees citing difficulties finding advisers who can meet all their needs’. To be fair financial planners can only provide so much information about different investment opportunities, so why don’t the 80% of financial planners engage external experienced and licensed specialists to provide diversified education for alternative investments to assist their clients with expanding their knowledge. Perhaps it’s time for financial planners to think outside the box and incorporate cutting edge education by tapping into external experienced and licensed providers of alternative investments to value add to their current services being offered to clients.