More SMSFs turning to accountants for investment advice

SMSFs are increasingly turning to their accountants for investment advice.

The number of SMSFs using an accountant for investment advice has reached 86,000, up from 73,000 in 2016, according to the 2017 Vanguard/Investment Trends SMSF Report. This may be driven by the licensing change for SMSF advice.

More SMSF trustees are also reporting that they have unmet financial advice needs – 277,000 said they needed professional advice, compared to 255,000 in the 2016 report.

There are clear opportunities for accountants to provide more value to their SMSF clients, said Vanguard Australia Head of Distribution, Matthew Lumsden. The report found that only a third of SMSF trustees said it was important all their financial advice needs are met through a single adviser.

“Planning for tax and contributions strategies and retirement planning continue to be areas of high demand for advice, with 52 per cent of trustees likely to turn to a financial planner for advice, and 48 per cent more likely to use an accountant,” said Vanguard.

Though Vanguard also says that debate continues about how to integrate licensed SMSF advice into traditional accounting businesses. 40% of accountants with SMSF clients said the restrictions around giving advice was an issue, according to the 2017 report. Mr Lumsden said the current model of formal or informal arrangements between accountants and financial advisers was serving SMSFs well.

“When we look at how the SMSF sector is evolving, it’s positive to see that both accountants and financial planners have a growing number of opportunities with SMSF clients,” said Mr Lumsden.

“This research shows that a projected 129,000 trustees who are using accountants for tax advice would be willing to also receive investment advice from their accountant, which is a tremendous vote of confidence and trust. We expect more accountants to respond to this demand in future, however we also expect that the concept of partnerships and referral arrangements between financial planners and accountants will continue to be the norm for the SMSF sector,” he said.

“The research also validates the success of planner and accountant partnerships that Vanguard has been hearing about from our clients’ advisers, particularly with trustees saying they are comfortable with a team of separate professionals who can provide highly specialised services for their SMSF, be it accounting, investment advice or legal services. We hear plenty of stories of success from professional advisers, particularly from planners, who often tell us this model has been a great benefit to their clients and to their businesses.”

The 2017 Vanguard/Investment Trends SMSF Report is based on a survey of over 3,000 SMSF trustees, 900 accountants and 470 financial advisers.

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