The SMSF property boom has just begun and it's gathering pace - but do brokers understand the size of the prize when it comes to predicted growth of the sector? We speak to Sinclair Taylor of Westpac and Andrew Russell of Mortgage Choice for their thoughts on why brokers need to skill up for the SMSF stampede.
Video transcript below:
Donna Sawyer, Australian Broker TV
Donna Sawyer: If you are a broker and you don’t understand how big the opportunities are in the SMSF market, this is your wake up call. Sinclair Taylor of Westpac says the size of the prize is enormous and it’s growing.
Sinclair Taylor, Westpac
Sinclair Taylor: Superannuation in this country is worth about 1.3 trillion dollars of which about a third sits in self manged superannuation funds, so that’s $440 billion of assets. That’s projected to double in size over the next 10 years. So by 2022, we are looking at over $800 billion in self managed superannuation, so very very significant.
Andrew Russell, Mortgage Choice
Andrew Russell: It clearly shows that there is a great opportunity for lending in this space to take advantage of the gearing opportunities and that just places extremely well for brokers to be able to tooled, skilled up and have the product knowledge to be able to help customers get themselves into a self managed super fund space.
Donna Sawyer: Andrew Russell of Mortgage Choice says forecasted growth in the SMSF sector is expected to be so large, it’s training staff in these deals and is even considering offering a loan product tailored to SMSF trustees.
Andrew Russell: It’s all about training and so to educate our brokers in terms of their compliance responsibilities, what are the products that are actually on offer, so they will be able to provide best in class lending services to our customers. The most important thing is from a knowing where the line is, the delineation between advice and ensuring that our customers have spoken to their financial planner, talked to their accountant to ensure that a self managed super fund is most appropriate for themselves, but then being able to have experienced lenders to be able to provide the funding if they chose to go down that path.
Sinclair Taylor: I think brokers are certainly cottoning on to it. There is certainly lots of trade press and also broader market press around the rise of self managed superannuation. It is the fastest growing sector within the superannuation industry and certainly property lending is also on the rise and with flat interest rates, equities are on sort of flat as well, people are certainly looking to other asset classes to invest their money.
Andrew Russell: Right now we are trying to understand what our customers are asking for and the product features that they think are most appropriate for their needs in the self managed super fund space. We are collecting a lot of information on that, getting great feedback from our brokers and based on that information I would imagine in the next 12 months, we will start looking into at a product in that space.
Donna Sawyer: So what do brokers need to know about SMSF trustees? Sinclair Taylor of Westpac says brokers need to understand the emotional drivers behind why people want an SMSF to begin with.
Sinclair Taylor: I think for brokers certainly understanding why clients want to invest in self managed superannuation is the starting point. And there are two key emotional drivers, certainly control and flexibity. So you have got clients, who want to take greater control of their retirement savings and they are also looking for flexibility into what they can invest into and direct property ownership is certainly one of the key attractions to self managed superannuation. It is the only type of superannuation investment that you can have that you can directly own property within.
Donna Sawyer: This is Donna Sawyer reporting for Australian Broker TV.