Mercer actuary David Knox says the data used to determine the old age dependency ratio is “totally out of date” and overstates the severity of the problem.
From their inception, SMSFs have always attracted more than their fair share of criticism. Now it’s an ageing membership that’s being used to restrict their numbers.
Dunbar’s number and the advice client quantum query
As the great exodus of financial advisers continues, greater strain is being placed on the advisers who remain as they automatically inherit client books from those that have departed.
As the planning industry starts to utilize newer technologies, increased efficiency emboldens firms to take on even more clients. However, research into human psychology suggests there is physiological limit to the maximum number of clients we can handle.
According to a new study by Stockholm University, an individual human can maintain stable social relationships with about 150 people, not more. “This is the proposition known as ‘Dunbar’s number’,” the report explains. “That the architecture of the human brain sets an upper limit on our social lives.”
The Dunbar’s number is named after the British anthropologist Robin Dunbar, who extrapolated the correlation between the relative size of the neocortex and group sizes in non-human primates.
Put simply, humans can only handle a maximum of around 150 relationships in total, whether it’s Facebook, personal friendships and clients. Beyond that, it becomes difficult to keep track and remember details of each relationship.
US adviser and author Michael Kitces applied this theory to the financial planning industry, where he found the Dunbar number held true.
In his report he found that “most financial planners, even with very efficient practices, seem to ‘cap out’ at a maximum number of clients around 100-125; beyond that point (if not before), they just can’t seem to maintain the client relationships”.
