- Accountants involved in SMSFs know change is occurring
- Online access is expected for SMSFs
This article was contributed by Class, Australia’s leading cloud-based SMSF administration software.
Every accountant and adviser involved with SMSFs knows that their industry is undergoing profound change. The super reforms have been capturing the headlines but they are just the latest development. The rapid advance of technology is helping drive a rapid revolution in the competitive landscape for SMSFs.
With about 25% of all SMSFs in Australia (140,000 funds) administered on their software platform, Class has a unique view of many of these changes. Kevin Bungard, CEO outlines the key trends that accountants and advisers in the SMSF space need to be aware of, so that they can “catch the wave” currently breaking over their industry.
The growing importance of online access for SMSFs
Online access is increasingly expected by Australians for their SMSFs, much like the way they already access bank accounts, share trading and other financial services. Class saw the need for providing ease of access and visibility for trustees, and developed its client view feature and mobile app.
The market share of online SMSF administrators has roughly doubled from 8% to 15% in the past five years, driven by competitive fees and user-friendly online access for trustees. Despite this Kevin claims that, “Accountants sometimes tell me that their clients are not greatly interested in online access to their SMSF, but could it simply be that clients who want online access are not choosing them for their administration?”
SMSF administrators in the cloud grow faster than their peers
The typical SMSF practice using Class grew at 17% per annum in the five years to November 2016, compared with an industry growth rate of 5%.
The right cloud-based SMSF software is highly automated and has audited, direct-connect data feeds to maximise processing efficiency. These make an SMSF business easily scalable and gives it the capacity to service more SMSFs without taking on more staff. It also gives directors more time to focus on business strategy.
Opportunities in DIY SMSFs and outsourced administration
There is a trend towards general accounting practices outsourcing their back of office administration, so they can focus on tax lodgement and the client relationship. There is a growth opportunity here for efficient administrators, since practices with 25 SMSFs or less still make up 11% of the market and are typically doing their administration with Excel. Class software can be easily white-labelled so multiple businesses can be administered under the one brand.
The huge pool of wealth waiting for you outside super
Despite a fall in growth of SMSF numbers last financial year, Kevin Bungard believes there will be a bounce-back once the sector has digested the super reforms. However, it’s highlighted the fact that SMSFs are not the be all and end all of wealth accumulation.
“Accountants should not ignore the huge opportunities in their clients’ non-super investments: an estimated $3 trillion of investable assets (excluding the family home). This includes trusts, companies and individual portfolios.”
Class developed its Class Portfolio product to help advisers and accountants administer these types of funds.
Sign up for a free trial to discover how Class can help you take advantage of these opportunities.
Class is a proud sponsor of National SMSF Conference. Explore the latest legislative updates and help your clients meet the challenges at National SMSF Conference.