22 nd Melbourne Money & Finance Conference 2017

Transcription

1 22 nd Melbourne Money & Finance Conference 2017 EVOLUTIONARY TRENDS IN THE FINANCIAL SECTOR Monday 10 th and Tuesday 11 th July 2017 Australian Centre for Financial Studies

2 SMSF Sector Overview Challenges Ahead 2

3 SMSF Sector Overview

4 Jun-04 Feb-05 Oct-05 Jun-06 Feb-07 Oct-07 Jun-08 Feb-09 Oct-09 Jun-10 Feb-11 Oct-11 Jun-12 Feb-13 Oct-13 Jun-14 Feb-15 Oct-15 Jun-16 Feb-17 $ (million) Outlook for the SMSF Sector Key SMSF statistics 590,742 funds 1,120,177 members $674.7 billion in assets Average and median assets Asset values Average assets per member 589, , , , , , ,000 Total SMSF Assets Median assets per member Average assets per SMSF Median assets per SMSF 354,882 1,111, , , ,000 0 Quarter 4

5 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Outlook for the SMSF Sector SMSF sector growth has continued but has softened in recent years 700,000 Total number of SMSFs 13,000 Quarterly SMSF establishments 600,000 12, ,000 11, ,000 10,000 9, ,000 8, ,000 7, ,000 6, ,000 5

6 Percentage of SMSF members Proportion of all new SMSF members Average SMSF member age Outlook for the SMSF Sector SMSF demographic is trending older but SMSF members by age Proportion of new SMSF trustees by age 16.00% 30% % 12.00% 10.00% 25% 20% % 15% % 10% % 5% % % 0% Year 45 Age ranges Average member age 6

7 SMSF ASSET ALLOCATION - MARCH 2017 Listed shares, 30.8% LRBA Investment Breakdown Cash, Term Deposits and debt securities, 24.5% 50% 45% 40% 35% 30% 46% 45% LRBAs, 3.8% 25% 20% 15% 10% Overseas assets, 1.3% Commercial property, 11.6% Resdiential property, 4.2% 5% 0% 0.14% 3% 2% 4% 1 Australian residential real property Australian non-residential real property Overseas real property Trust and managed investment, 19.7% Other assets, 4.2% Australian shares Overseas shares Other 7

8 Challenges Ahead

9 Superannuation legislation changes Increased complexity Transfer balance cap and CGT relief Increased need for advice and compliance assistance Real time reporting Lower contribution caps $25k concessional/$100k non-concessional Affects SMSF members in their mid-50s to mid 60s most. 9

10 Investment Allocation SMSFs have performed well over the past decade Should not allow from complacency SMSFs should be considering increasing their portfolio diversification by increasing exposure to: Different markets to reduce home bias. Different market sectors to better harness the benefits of economic growth in new industries (e.g. greater exposure to technology companies not found on the ASX) Different asset classes, especially fixed interest and bond investments. 10

11 Retirement Income SMSFs have performed well in delivering retirement income to members 94% of benefits paid from SMSFs are in the form of an income stream Account based pensions preferred mechanism Low take up of retirement income products that manage longevity risk and volatility in income. Will new CIPR world challenge SMSFs in this space? Is there a need for more sophistication? 11

12 Aging SMSF population Two key issues: Loss of capacity to be a trustee through cognitive decline Death benefit disputes ALRC addressed both issues in report Elder Abuse - A National Legal Response Advice and education as critical as law reform 12

13 Financial advice New education and ethical standards from 1 January 2019 Ongoing challenges advising trustees on: Retirement advice/strategy Pension management/strategy New superannuation laws Investment research and products 13