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Russell has eye on SMSF trustee and adviser education
Russell Investments aims to work more closely with dealer groups to provide better solutions for the self-managed super fund (SMSF) sector.
Managing director of retail investment services Patricia Curtin said the group was keen to engage in consultation as well as education partnerships with dealer groups.
She said the education of trustees was becoming more of an issue as the sector continued to grow rapidly. The SMSF sector is growing by 20 per cent per annum, and is set to take over a third of the overall super sector.
Curtin said that while trustees had confidence in their investment decision-making, she questioned whether the majority had the competence. She said education becomes all the more important from the standpoint that asset allocation drives 90 per cent of the performance of a portfolio.
“I would say that this whole idea of asset allocation is an area that individual investors, as they are taking greater control of their retirement, need to be concerned about,” said Curtin.
She said there was a high concentration in one or two asset classes. She added that some of the other biases that have been identified in SMSFs include: a preference for local over global equities, a focus on risk over return, and a focus on tax benefits rather than investment benefits.
Curtin said the propensity for SMSFs to invest in a high proportion of Australian equities and cash has stood them in good stead over the last few years.
“But is that the right proposition going forward?” she asked. “Should they be thinking about greater diversification across all asset classes?”
She said that the SMSF sector had a good compliance track record.
“They seem to be set up for the right reasons, fee levels are appropriate and trustees are taking responsibility,” said Curtin. However, she added that based on the focus of the various industry reforms, it appeared that the Government wanted to see more trustee education to ensure that trustees understood their responsibility to take control of their retirement. She added that the Government also wanted to ensure that service providers were compliant, were experts in their field and could be relied upon.
AUTHOR
Mike Taylor
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