Regulatory change challenges SMSF advisers, trustees

Financial advisers working in the self-managed superannuation funds (SMSFs) space have flagged the indexation of the transfer balance cap as being one of the big hurdles currently confronting them, according to Investment Trends.

But while advisers are worried about the transfer balance cap, their clients are worried about the proposed tax increase on super balances over $3 million.

These are two of the factors to emerge from the Investment Trends 2023 SMSF Adviser Report with the company’s head of research, Irene Guiamatsia confirming that fast-changing regulation has exacerbated the complexity of the superannuation system and continues to pose a challenge.

“Our research tells us advisers are anticipating the indexation of the transfer balance cap as having the greatest impact, however investors themselves are actually more concerned with the $3m cap proposal,” she said.

The Investment Trends report also reveals the proportion of financial advisers providing SMSF advice continues to rise (79%, up from 74% in 2022 and 72% in 2021), noting this results in a lower proportion of SMSF specialists’ (those advisers who service over 20 SMSF clients).

It found that advised SMSFs appear appreciative of the support they are receiving, as two in five advisers report an increase in practice revenue derived from SMSF clients over the past year.

The research also points to the possibility of brighter days ahead with views shifting on which clients are suitable for a SMSF.

“It’s pleasing to see advised SMSFs appreciate the value delivered and be amenable to paying more for it,” said Guiamatsia. “The challenge for advisers is to demonstrate value to the much larger pool of unadvised trustees who acknowledge gaps but remain reluctant to seek advice”.