Although half of SMSFs believe they have strong or very strong knowledge about investments, a recent survey has shown a worrying lack of diversity in their portfolios. The new Intimate with Self-Managed Superannuation report has shown that cash and term deposits accounted for more than a third of SMSF investments last year, despite returns of just 4%. International equities returned 19.1% but accounted for only 6% of asset allocation on average.
Russell Investments CEO Asia Pacific Alan Schoenheimer said the concentrated allocations demonstrated a lack of diversification, and advisers played a pivotal role in educating SMSFs about different opportunities.
“Financial planners are well placed to educate trustees about the more recent adaptive asset allocation approaches employed by many funds – allowing them to readily adapt to changes in the investment environment and client circumstances,” said Schoenheimer.
He suggested planners broaden their advice services, “to include competency in new adaptive investment opportunities and other direct asset classes to provide strategic guidance to SMSF trustees and bridge the gaps in knowledge”.
SPAA CEO Andrea Slattery encouraged planners to upgrade their skills and become specialist advisers in the SMSF sector to reap commercial opportunities highlighted by the research.
Key findings of the research showed:
SMSFs reduced holdings to Australian equities to 37.1% down from 43.5% in 2011
Cash and term deposits accounted for 33.9%, an increase from 25.6% in 2011
The majority (61.6%) of SMSFs relied on their own research to drive investment choices
Sixty-three percent of trustees said they were reasonably confident that were on track to achieving their retirement goals – 36.5% may fall short
SMSF trustees view traditional asset allocations as too inflexible
Do you see the rewards in becoming a specialised SMSF adviser?