1.4 million to seek advice

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Advisers have a huge opportunity in the next three years, to tap into a market of 1.4 million Australians intending to set up an SMSF.

However, the new-age investors are displaying different characteristics to the traditional SMSF investor, so advisers will have to quickly adapt their advice models if they want to attract, retain and communicate effectively with the potential clients.

The new profile:

Almost half (46%) 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.

This is according to new SPAA and Macquarie research, The Active Management Report.

Intending investors have shown not only a greater need, but a greater appetite for professional advice. They find life particularly stressful, struggling with time (36%) and money (33%), as well as striving to live in the location of their choice (21%).

“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,” says SPAA CEO Andrea Slattery.

Building a relationship with intending investors’ families is more important than ever, as they will play a vital role in clients’ decision-making processes. The most commonly discussed topic among intending investors is their financial worries. However, rather than discussing in an off-hand manner, SMSFs are more likely to turn talk into action, suggesting an interest in creating concrete plans.

“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,” says Macquarie Bank’s analytics insights manager, Gary Lembit. “It is therefore important for SMSF professionals to involve family members in the advice process.”

Advisers will also need to be prepared to discuss property gearing more frequently with investors. Direct property investment has continued to grow and in March it accounted for 14.7% of SMSF assets, up from 10.7% in June 2006. Property assets grew in value by 230% over the same time period.

Investors in their late 30s and 40s are most likely to consider investing in direct property. As the super guarantee increases to 12%, advisers can expect more enquiries from younger generations as SMSFs gain in popularity and their super balances increase, according to the report.

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