Roll up, roll up - $560 billion in SMSF for the taking!

OK, so that’s taking the mickey a bit, but let’s be honest with ourselves, that half a trillion dollars is the main reason that most product providers are interested in self managed super funds.

But as countless product and service providers have discovered, getting your dirty mits on all that caaaaaaaash is way harder than it first appears. There are a couple of reasons for this.

Firstly, the main advisor for most trustees is still their accountant. Well that’s no problem you say, we’ll just get accountants to  flog… oops, I mean, recommend your wonderful product. But then the trouble starts. Generally speaking, your average accountant (even if they are fully licensed to give financial product advice) won’t recommend a single product. The reason always given is that accountants don’t want to lose their ‘most trusted adviser’ status with their clients. That’s true, but I think it’s much deeper than that.

Most of the SMSF accountants I’ve met are experts in SMSF tax and compliance. They know all the ins and outs and what they don’t know, they’re keen to learn. Contrast this to investment products. Before your average accountant would recommend a single managed fund or any other financial product, they will need to feel confident that they deeply understood the type of product as well as this individual product. How it stacks up against the other options, what the pricing is like, why it really is in the best interest of their clients, etc, etc. And which accountants do you know who have the time or interest to do all that? Exactly.

The second reason that selling products to SMSF trustees is so hard is that there’s a million and one reasons for someone to start an SMSF, and that means that what’s driving the behaviour of each trustee is going to be different. In a way, you can liken SMSFs to atheists in that, rather than being a coherent group, they are in fact the people who have opted out of all the religions for their own individual reasons, or in this case, opted out of industry, corporate and retail super funds.

All is not lost though, there are distinct segments within this group, you just have to work out which ones are going to be interested in your product, and not fall for the old “1% of $560b is $560m so we’re all going to be RICH! Yeah!” approach.

The other thing to remember is that not all SMSF trustees are self directed. About 20% get financial advice, which, interestingly, is about the same proportion as for the general population. So you can definitely access these people through their financial adviser or stock broker. And this is where most ‘products’ are taken up by SMSF trustees.

Just to be clear, I have no problem with trustees being recommended high quality, cost effective investment vehicles for their SMSF. What makes me laugh is the idea that it will be easy to do so.

And really, that’s why we started Mayflower. Because there ARE high quality products and services for SMSFs out there, and those products and services should be supported to deliver the great outcomes that more than a million SMSF trustees are looking for.