Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 172

Investor surveys highlight opportunities for financial advisers

Financial advisers have an opportunity to capitalise on a shift from direct investing by SMSF trustees, as well as the large-scale financial illiteracy in the community, according to separate reports from Vanguard and Workplace Super Specialists Australia (WSSA).

The 2016 Vanguard/Investment Trends SMSF Report is a comprehensive study of Australian SMSF investment patterns, collating responses from more than 3,500 SMSF trustees and 570 financial planners. It found that increasing market volatility was affecting the way SMSF trustees were investing.

Elsewhere, WSSA found that almost two fifths of Australian workers need to improve their financial wellbeing, and that only about a third were considered financially healthy.

Both these surveys suggest potential clients have significant unmet needs, and advisers should find a way to connect and educate.

Shift from equities to managed funds

Among the Vanguard survey’s findings was a significant move in fund allocation from domestic shares towards actively managed funds, infrastructure and REITs. Direct equities as a share of SMSF portfolios has fallen to 38% on average from a peak of 45% in 2013. Over the same period, the percentage of managed fund investments in SMSF portfolios has increased from 7% to 10%.

Speaking at the report’s launch, Recep Peker, Investment Trends’ Head of Research, Wealth Management, said,

“SMSF investors often favour blue-chip shares that promise premium dividends and franking credits. But this year we saw trustees’ appetite for direct shares fall. In previous years, fixed income products have been popular in volatile times, but with interest rates at all-time lows, SMSFs want assets that diversify their portfolios, the data suggests.”

SMSF sector seeks more help

Interestingly, the number of SMSF trustees who said they had ‘unmet financial advice needs’ rose from 212,000 to 255,000 over the past 12 months, the survey found. “Consistent with previous years, trustees cited inheritance and estate planning, pension strategies, and longevity risk as key areas where they need more advice,” Peker said.

Vanguard Australia Head of Market Strategy Robin Bowerman said the research also revealed that SMSF trustees want professional help validating their investment strategies and portfolio construction.

Ben Marshan, Head of Policy and Government Relations at the Financial Planning Association of Australia, agreed that there were great opportunities for financial planners to develop strategies for SMSFs, but they needed to fully understand their own skill sets.

“My concern is that planners often don’t have the tools required to build portfolios. They may be good at modelling and cash flow but are lacking a sufficient understanding of which balanced funds to put specific customers into.”

If financial planners really want to capture more of this market share they need to make decisions about the type of advice they’re providing, who they’re providing it to and have a deep understanding of the best products to offer, he added.

Over the 12 months covered by the report, only 37% of SMSFs used a financial planner, which was a slight increase over last year but did represent the first rise in that statistic since 2007. It also revealed how much of the SMSF market is still untapped for planners.

The amount of revenue financial planners derive from SMSF clients was steady at 19%, however, the planners surveyed were positive about the potential to grow this to an average of 27%. The total proportion of financial planners who work with SMSF clients remained steady at 69%.

Financially unwell staff

Meanwhile, WSSA has released its inaugural Financial Wellness Index of Australian workers. CoreData conducted the research for WSSA, and found 39% of employees were categorised as either ‘financially unwell’ (12%) or having ‘room for improvement’ (27%). Under a third (29%) were ‘on the way to wellness’, while 26% were ‘financially well’ and 6% were rated ‘superstars’.

WSSA represents workplace superannuation specialist advisory businesses and its members currently provide financial advice to thousands of corporate super funds.

“This data should be regarded as a cry for help from everyday Australians and their day-to-day reality,” WSSA President Terry Rhodes said. “It is a situation that is both stressful and costly for employees and employers.”

The most common behavioural impact of poor financial wellness in the workplace described by employers is stressed employees (61%), unengaged/distracted employees (43%), and low morale (30%).

The survey also found a key driver of financial wellness was financial literacy: more than half of the ‘financially unwell’ have poor or very poor financial literacy, whereas 93% of ‘superstars’ have strong or very strong financial literacy.

Marshan said only 20% of consumers currently seek out financial planners and 10% have ongoing relationships.

“For many people, understanding their own financial position and what their choices are can be overwhelming. These statistics highlight how broad the market is and the extent of the opportunities available.”

He said financial planners looking to take advantage of consumer demand should carve out their own niche, acquire as many professional certifications as possible and belong to the most relevant associations for contacts. They should also take full advantage of tools such as social media including Facebook, Twitter, Pinterest, and Linked In.

Australian employers do support improving financial literacy: more than 60% said employees’ financial literacy was extremely or very valuable. An overwhelming 90% of employers said one-on-one sessions with advisers was the most valuable way to improve financial literacy.

Both these surveys confirm there is strong potential for financial advisers to improve long-term outcomes and enhance the financial literacy of their clients.


Alan Hartstein is Deputy Editor at Cuffelinks.



Leave a Comment:



Three areas SMSFs should consider outsourcing

SMSFs allocating to managed funds and global

How I manage the Third Link money


Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates


$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.


Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.