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

Three steps to planning your spending in retirement

What happens when a superannuation expert sets up his own retirement portfolio using decades of knowledge? He finds he can afford much more investment risk in his portfolio than conventional thinking suggests.

Five stock recoveries not hanging on COVID predictions

The focus on predicting the recovery from the pandemic is the wrong emphasis. Better to identify great companies benefitting from market changes over a three- to five-year horizon with or without COVID.

Peak to peak, which LIC managers performed during COVID?

A comprehensive review of dozens of LICs shows how they performed in the crucial 'peak to peak' of COVID. This 14 months tested the mettle and strategies of a sector often under fire, with many strong results.

Finding sustainable dividend stocks on the ASX

There is a small universe of companies on the ASX which are reliable dividend payers over five years, are fairly valued and are classified as ‘negligible’ or ‘low’ on both ESG risk and carbon risk.

Blink and you missed a seismic shift in these stocks

Blink and it happened. If announcements in this sector were made by a producer of iron ore, gas, copper or some new tech, the news would have been splashed across the front pages. Have we witnessed a major change?

How inflation impacts different types of investments

A comprehensive study of the impact of inflation on returns from different assets over the past 120 years. The high returns in recent years are due to low inflation and falling rates but this ‘sweet spot’ is ending.

Latest Updates


Platinum’s four guiding investment principles

Buying mispriced stocks is often uncomfortable when companies are outside the spotlight and markets are driven by emotions. And it's inescapable that the price paid ultimately determines the end result.


Andrew Lockhart on corporate loans as an income alternative

Loans to corporates were the traditional domain of banks, but as investors look for income alternatives to term deposits, funds have combined hundreds of loans into a single structure to create a diversified investment.


10 things I learned in my faux-retirement

Pre-retirees should ‘trial run’ their retirements. All those things you want to do - play golf, time with the family, a hobby, write a book - might not be so appealing in reality, but you might discover other benefits.


Achieving a sufficient retirement income portfolio

Retirees require a reliable income stream to replace the wages they received when they were working and should focus on the dollar income generated over time rather than the headline yield percentage.

'Wealth of Experience' podcast and ASA webinar on ETFs v LICs

Peter reveals some top stock picks with an emphasis on long-term assets like Sydney Airport, Graham discusses spending in retirement and valuing assets, the key to Amazon, guest Andrew Lockhart and plenty more.


Lucy Turnbull’s three lessons on leadership and successful careers

From promoting women to boost culture to taking opportunities as they arise, Lucy Turnbull AO says markets should not drive decision-making and leaders must live and breathe the company's mission and values.


Are concerns about inflation inflated?

While REITs and some value stocks are considered 'inflation-sensitive' assets, the data provide little support that they are good inflation hedges, and energy stocks and commodities are too volatile. So what works?



© 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.