Younger SMSF clients seeking transparency, ethical investment focus

While ATO statistics indicate a slight rise in the number of younger SMSF trustees, advisers looking to attract and retain these younger clients may need to tailor their current service offering, according to a wealth management platform.

Shannon Bernasconi, the managing director and co-founder of Wealth O2, a wealth management platform for advisers, said advice firms looking to target a younger a demographic of SMSF clients should ensure their service has a focus on ethical and sustainable investments, high-touch content and transparency.

Statistics released by the ATO in May indicate there has been a slight rise in the number of younger individuals setting up SMSFs, with 79.8 per cent of the individuals establishing new funds below the age of 55. Around two-thirds of SMSF entrants are now under the age of 50.

Ms Bernasconi explained that younger clients have a much bigger focus on ethical and sustainable investments, so advice firms looking to target this segment of the market will need to be able to cater to this in how they manage client funds.

“You need to be able to override or substitute different assets, so if a client has an ethical issue with oil or mining, for example, it can be substituted with another investment,” she said.

Having transparency around the investments in their portfolio is also critical to younger clients, she added.

“They’re not as trusting as older generations. They like the idea of having transparency and that everything is clear in terms of where their assets are and how you’re managing them,” she said.

Having this transparency, she said, provides them with a greater sense of control over their own money and portfolio.

They also want to hear from their adviser more than once a year, she explained, so advisers may want to look at providing automated newsletters and communication on a regular basis.

“They should be looking at providing high-touch content with low administration. To be honest, the older generations also like this, but the younger generations demand it,” she explained.

“It’s important to keep them constantly updated, even if it’s just a bit of news. There’s so much going on in the world these days and they want to know that you’re going to look after their portfolio if something happens with Trump in a particular week.”

She also stressed that younger clients want to have instant access to their portfolio and client portal through their phone and other devices at all times.

“That digital connectivity is a huge must,” she said.

Source: SMSF Adviser