This year was a very good 12 months for financial planning. Money flowed into superannuation as pre-retirees poured up to $1 million each into their funds before new rules came into force on July 1.
By October, the superannuation changes were being blamed for a spike in household debt as Australians drew down on their mortgages at record levels to pump money into superannuation. ABN Amro analysts reported a close correlation between record super inflows in the second quarter of 2008 and a record increase in household debt.
Investment houses said net super inflows totalled a record $49 billion in the second quarter, up from an average inflow of $20 billion per quarter over the preceding 12 months. Retail funds received the largest portion of contributions, taking in $23.1 billion. In June, BT’s wrap accounts received $2 billion in inflows, compared with last year’s June figure of $1.1 billion.
“Since I have been in the industry, I have never seen anything like it,” BT Financial Group head of wrap Chris Freeman says.
“For the first time people are coming to our financial planners asking about superannuation as opposed to being told about superannuation.”
Asgard recorded a 250 per cent increase in inflows. Industry funds took $9 billion for the quarter. Two industry funds in particular found inflows increased dramatically, with Sunsuper recording a 290 per cent jump in member contributions (from the year before) and Statewide enjoying a 51 per cent lift in inflows for the same period.
The Simpler Super reforms saw more than $50 billion poured into self-managed superannuation funds (SMSF) in the past six months.
However, the Association of Superannuation Funds of Australia reported that fewer than 5500 people had more than $1 million in a personal retail super fund.
Advisers were busy up to June 30, with reasons to contact clients, have clients contact them and to pour money into superannuation. There was no downtime, markets were doing well and advisers were able, momentarily, to take their focus away from the public’s perception of commissions versus fees and even to stop moving from dealer group to dealer group.
Financial Services Partners chief executive Geoff Rimmer said it was the best year in financial services for around 15 years. “We took more money, $7 million, in the first half of yesterday [June 26] than we did in the corresponding week a year ago,” Rimmer told IFA in June.
“Over the last six weeks we are 400 per cent up, but if you overlay that into the year, you are about as much as you would have expected after the opportunity [Treasurer] Mr [Peter] Costello provided us.”
Reporting season found most fund managers had done well with the Simpler Super bonus.
However, from July to December the adviser focus was to invest the money that had been put into super. And now that mostly has been achieved, it is time again to look at dealer groups – moving, attracting clients and marketing to the masses.
