SMSF growth continues, driven by advised segment

20 APRIL 2022

SYDNEY: Strong growth in new SMSF account openings has continued post the height of the COVID-19 pandemic but has shifted from self-directed to advised clients, according to AUSIEX (Australian Investment Exchange Limited)

Women and younger generations continue to drive new account openings, with the first SMSF accounts from Generation Z investors opened in the past year.

While SMSF account holders are generally more engaged traders than non-SMSF account holders, some ignored the ‘nightmare’ of rising inflation to trade for the first time during heightened volatility in January 2022.

AUSIEX is one of Australia's leading providers of wholesale trading solutions and serves more than 10% of Australia's total SMSF market. The advised book is 51.3% of all SMSF accounts, the self-directed segment makes up 43.9%, and the remaining 4.8% belong to advised wrap platform accounts.

AUSIEX reported a 9.3% increase in new SMSF accounts opened during July-September 2021 relative to the corresponding quarter in the previous financial year, driven by self-directed investors while the 2021 calendar year had a 5% growth on the total book . However, since this period, the advised segment has become the leading source of new SMSF account openings, including a sharp rise in September 2021.

AUSIEX CEO Eric Blewitt said in these figures we might be seeing the effects of post-pandemic recovery. “Self-directed investors who not long ago had the time to set up and manage the compliance obligations and direct their investments, may be finding themselves facing both challenging investment conditions and time poor once again. As a consequence they may now be again seeing the value in and actively seeking professional advice.”

The proportion of Millennial advised SMSF clients has also quadrupled in the past decade, and the average age of the principal contact on new SMSF trading account is down from 67 in 2012 to 59 in 2022.

Looking at the gender ratio; advised clients, as at February 2022, females accounted for almost 28% of new advised principal contact SMSF clients. Back in 2012 only 18.5% of all new advised SMSF clients were female. This ebbed and flowed up to around 20% by 2019 after which point it has increased strongly year on year.

Mr Blewitt said the advised SMSF segment shows clear investment preferences. “Advised clients are a distinct group within SMSF accounts and have regained ascendancy over new self-directed SMSF accounts in the second half of 2021. Advised SMSF clients are far more likely than self-directed SMSF clients to trade ETFs and are also more bullish on AREITs, hybrids and exchange-traded physical commodities.”

January sees SMSFs trade where others fear

SMSF accounts are more engaged traders on AUSIEX than other types of account holders. An advised SMSF account opened in 2012 took an average of 194 days to place its first trade. An advised SMSF account opened in 2021 however took just 40 days.

Interestingly, as fears of inflation and rising interest rates sent stock markets tumbling in January 2022, SMSF accounts were net buyers throughout the month, averaging 57% buys.

“Our data shows that while the bulk of SMSF investors are still older Australians, the face of investing in Australia is changing – and perhaps also growing in confidence,” said Mr Blewitt. “By and large, SMSF investors are optimistic. They are net buyers through the market cycles and are prepared to hold their nerve in the face of dramatic local and global developments, such as a rout in tech stocks and the first increases in official interest rates. And they are willing to look outside the local market and conventional options to play bigger themes that drive investment returns.”

AUSIEX was named Adviser’s Choice for Australian Shares at the SMSF Service Provider Awards for 2021 and Advice Platform Provider at the 2021 SMSF Awards.

Media enquiries:
Suzanne Dwyer
Honner
suzanne@honner.com.au / +61 (0)402 99 00 29

About AUSIEX

With over 25 years of experience in the local market and the backing of a multinational trading technology powerhouse, AUSIEX combines deep expertise with trusted and reliable technology to deliver trading solutions for financial institutions, intermediaries, advisers and industry participants. Owned by Nomura Research Institute, Ltd (NRI), AUSIEX specialises in equities execution, clearing and settlement services and equities administration for the wholesale market.

As one of Australia's leading providers of trading solutions, AUSIEX has used its scale, expertise and heritage to deliver value for advisers, brokers, many large institutions and tens of thousands of their clients by seamlessly connecting them to markets.

This information has been prepared by Australian Investment Exchange Limited (AUSIEX) ABN 71 076 515 930 AFSL 241400, a Market Participant of ASX Limited and Cboe Australia Pty Ltd, a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited. Share Trading is a service provided by AUSIEX.