SMSFs accessing advice falls to six-year low: Report

The Vanguard/Investment Trends 2024 Self-Managed Super Fund Report found there is a high level of confidence among SMSF trustees and reveals their top two investment goals for the next year are building a sustainable income stream and maximising capital growth.

At the launch of the report on Tuesday, Dr Irene Guiamatsia, head of research at Investment Trends, said the research found that although many SMSF trustees were apprehensive about some aspects of retirement, mostly regarding lifestyle, one of the biggest concerns was about the regulatory changes that have occurred over the past 12 months.

“There were a small group that were concerned about outliving their retirement savings, but the majority of those had an average balance of $1.3 million, highlighting the disconnect between perception and the reality of longevity risk,” she said.

“Non-retirees expected to earn around 80 per cent of their current income from retirement, while those with an expected income gap (33 per cent) are already considering remediation options including moving into high yield products (57 per cent), seeking advice (42 per cent) or working longer (39 per cent).”

The top three most important features for non-retirees in SMSFs in retirement products were flexibility of access, competitive pricing, and the ability to adjust the size of income payments. Some also wanted to ensure they were able to leave an inheritance.

One of the most surprising results from the research was the decline in the number of SMSFs currently accessing advice. The number of funds using investment advisers dropped to a six-year low, but there was still a healthy interest in accessing advice from financial institutions and/or digital advice solutions.

“The proportion of SMSFs using advice has fallen to 23 per cent from 27 per cent in the past 12 months,” said Guiamatsia.

“Now only 140,000 SMSFs are advised compared to a high of 205,000 in 2019. The research showed that newly established SMSFs are less likely to use advisers, and those funds that do access advice use accountants, firstly, then auditors and SMSF administrators. Newly established SMSFs are also leading a trend towards advice from private wealth advisers.”

The unmet advice needs of SMSFs were stable, but the most common centred around contributions, undervalued assets, and capital preservations. Only 10 per cent of trustees wanted support in managing longevity risk.