Competition for SMSF Dollars - Where is the industry at? - What does it mean for advisers?

Transcription

1 Competition for SMSF Dollars - Where is the industry at? - What does it mean for advisers? Tom Collins Principal Breakout session 4B

2 acknowledgements Investment Trends clients include all of the top 5 Australian banks, the top 10 investment platform providers, the top 5 online brokers, the top 10 margin lenders, as well as industry regulators, leading dealer groups and financial planning software providers. comparator provides business benchmarking services to premier financial institutions. Using a carefully managed approach, the firm delivers detailed insights into the business economics, productivity and efficiency of peer businesses, competing in defined financial productmarkets of selected countries.

3 1 SMSFs where at?

4 2 SMSFs where at? Where are SMSFs heading Will SMSFs grow at same pace? How are other sectors likely to react? How is government likely to react? What other challenges are there? What does this all mean for advisers? North Yes Threatened! Trepidation? Behaving? Opportunity If?

5 Where are SMSFs heading

6 Naysayers - Don t Understand Drivers!

7 5 Naysayers - Don t Understand Drivers! Drivers both positive and negative Positive Choice Control/responsible Tax/Estate management Personal Negative Attitude.Paternalistic/smug Focus..Inward/Competitors Business model... Distribution Mass Market. Industralised

8 6 Champions Why? Clients 1. Control & buy direct 2. Disenchantment losses & costs 3. On advice from Accountant/Financial Planner

9 7 Control & buy direct Q50 Do you have a stockbroking account for your SMSF? 100% 90% 80% 32% 38% 29% 29% No 70% 60% 12% 9% 50% 40% Yes, more than one stockbroking account 30% 68% 62% 60% 62% 20% 10% Yes, just one* 0% May-07 [n=250] Jul-08 [n=449] May-09 [n=447] Apr-10 [n=711] Excerpt from the Investment Trends April 2010 SMSF Investor Report

10 8 Disenchantment Q63 Do you intend to invest in managed funds within your SMSF in the future? 100% 90% 25% No 80% 45% 44% 44% 70% 60% 50% 40% 30% 20% 10% 0% 43% 27% 40% 43% 8% 9% 3% 24% 18% 5% 14% 8% May-07 [n=237] July-08 [n=401] May-09 [n=420] Apr-10 [n=688] Maybe Yes, but not for at least 12 months Yes, within the next 12 months Excerpt from the Investment Trends April 2010 SMSF Investor Report

11 10 Cooper review Excerpts from comparator s Market Pulse Benchmarking Studies September 2010 Platforms

12 11 Will SMSFs grow at same pace - Yes SMSF quarterly net establishment rate (Source: APRA Quarterly Superannuation Performance Report) 18,961 Excerpt from the Investment Trends April 2010 SMSF Investor Report 6,744 6,158 6,152 6,847 7,912 5,909 6,003 6,864 8,096 6,358 5,640 5,978 4,230 6,190 6,509 7,229 6,748 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10

13 12 Will SMSFs grow at same pace - Yes Source: APRA quarterly superannuation statistics for September 2010

14 13 How are other sectors likely to react Threatened? Excerpts from comparator s Market Pulse Benchmarking Studies September 2010

15 14 How are other sectors likely to react Threatened? Total SMSF assets invested on platform by financial planners: $99bn Excerpt from the Investment Trends June 2010 SMSF Planner Report Excerpts from comparator s Market Pulse Benchmarking Studies September 2010

16 15 How is government likely to react too big to fail! SMSFs as a % of all Super: Funds 99% Trustees 99% Assets 31% Members 7% Cooper Review There are an average of 3,000 SMSFs per House of Representative's electoral boundary. This is enough to sway an election. No doubt the politicians have noticed this or if they haven't then I hope someone points it out to them! Tony Negline

17 16 What other challenges are there - Behaving? Tax minimisation vehicle of choice 15 February 2011 Kylie Wright, The News Mail, Page 13 The 2010 Treasury Red Book stated that Self Managed Super Funds are now the tax minimisation vehicle of choice. I agree. When compared to company tax rates of 30% and individual marginal tax rates of up to 46.5%, SMSF tax rates of 15% or 0%, can't be beaten. A SMSF in the accumulation phase has a 15% tax rate. That is it pays 15% tax on all earnings of the fund. Capital Gains receive a one third discount if owned for more than 12 months and then are taxed at 15%. This is fairly good, but you can reduce the tax rate further by the use of imputation credits on fully franked shares, within your Super Fund. In the case of a fully franked dividend, the dividend imputation system allows investors who have been paid a dividend to take a tax credit (franking credit) since the company has already paid tax (30%) on its income.

18 18 What other challenges are there? Senility! I remember the face, buy I ve forgotten the name!

19 9 SMSFs What does it mean for Advisers? Clients 1. Control & buy direct 2. Disenchantment losses & costs 3. On advice from Accountant/Adviser Financial Planners 1. Control & buy direct 2. Disenchantment losses & costs 3. Want to justify fees add real value Cooper review /FOFA intra-fund advice No commissions/rebates Opt in

20 19 What does this all mean for advisers? Opportunity If? Do you? Accountant Non-advised

21 19 What does this all mean for advisers? Opportunity If? Do you? Delegators Controllers Coach seekers Strategy? Technical /? A/allocation?? Product Selection? Implementation? On-going advice /? /? Non-advised Accountant

22 20 Where are SMSFs heading Excerpts from comparator s Market Pulse Benchmarking Studies September 2010 F/planners

23 where at? SMSFs - Advisers Thank you