Advisers need to demonstrate value to new SMSF cohort

Self-managed superannuation fund (SMSF) advisers need to overcome trust issues with millennials who are now getting into SMSFs, according to a consultant.

Speaking at the SMSF Association’s National Conference today, independent retirement consultant, Amara Haqqani, said millennials were inclined to do things themselves and pointed to the GameStop reddit situation and that the challenge for advisers was to demonstrate value proposition.

“The challenge is for advisers is to demonstrate their value proposition to the younger clients,” she said.

“It might not be a pure investment one, it might be other things advisers do very well. This could be setting them up for a broader financial advice piece and moving away from product style thinking on these things to more about how their financial planning framework works with people at that age because remembering that younger people may have an SMSF but it might not be their priority.”

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“They might still be raising their kids or still paying off their mortgages – where do advisers sit in that and that’s something that is a very different thing for them.”

Haqqani said there was a perception of “less information asymmetry” where people thought they could get their own information and did not need an adviser.

“So, what does an adviser do with that? How do they reassert their authority as an expert beyond the provision of product – I think the financial literacy piece is key,” she said.

“It’s not just a ‘have this product’ but ‘how does it fit in your broader portfolio’ and ‘what does it mean and how does that work into the future’. Those are all sorts of things that people can get information for seemingly but they don’t actually get the holistic advice and guidance.”

Haqqani noted that the oldest millennials had turned 40 and would be looking at SMSFs.

“Where SMSFs might have bene set up at an older point in time, late 40s or early 50s, you might find that is happening earlier on particularly with compulsory super being the way that it is,” Haqqani said.

“For this group of people who have had compulsory super their entire working life, they’re going to get to higher balances earlier and SMSFs might be more of a thing for them. That’s quite key.”