Advisers vs Trustees: Who's got it right?

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An analysis of SMSF portfolios has shown a different approach between total SMSF Trustees and those advised by financial planners.

Trustees advised by planners tend to have more diversified portfolios, according to CoreData research. They have higher allocations to international shares, fixed income and property. Advised SMSFs have more than twice the amount of fixed income (11.1% compared to 5.2%) and 10.9% allocation to international equities, compared to 5.6%.

SMSF Trustees are favouring Australian equities, with 49.7% share. Advised Trustees are slightly lower at 35.2%.

One consistency between the two groups has been the high allocations to cash and term deposits within SMSFs (versus the larger super funds). “This high allocation has been an effective technique for SMSFs to reduce their volatility while maintaining returns through the historic competitive returns of both cash and term deposits in Australia,” says CoreData senior consultant Angus Dennis. “Now though, a changing market environment is leading to a review of this strategy.”

He says the shift away from cash and term deposits will require careful consideration by advisers and Trustees alike, to achieve an outcome most suited to individual retirement needs.

Fortunately, insurance within SMSFs has increased from the 13% indicated at the time of the Cooper Review in 2010, to 27% now. This was due to Trustees viewing insurance in SMSF as “financially and tax efficient”. The most popular insurance providers are OnePath, MLC and Zurich, and the three most highly rated by SMSF Trustees are Macquarie, OnePath and AIA.

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