What makes a good SMSF administrator?

The growth of the self managed super industry has spawn specialist SMSF administrators, both domestically and abroad.  This specialisation has also extended to many accounting firms who are now also developing in-house solutions, with specialist services in SMSF administration to complement their financial services offering.

There has been some debate over the past week within the financial services media about the growing trend to outsourcing overseas, with strong growth being reported.  This has been questioned by leading domestic administrators, who argue that it is difficult to effectively manage all stakeholders from overseas, in particular, the Regulator (ATO).

On face-value, it seems like a normal tit-for-tat between service providers in what has become a highly competitive marketplace.  However, it is quite clear that there are two schools of thought about how to build a more efficient and profitable SMSF administration hub – to outsource or invest in technology.

The Cooper Review highlighted the fragmented nature of administrators within the country, with the largest administrator undertaking less than 3% of all SMSFs.  The issue of scale amongst SMSF administrators raised by the Panel never really got any impetus, however we do see a continued push by AMP to “industrialize” the SMSF sector and other similar institutions.  The reality however will continue to be that they represents a very small percentage of a burgeoning industry.

The case for outsourcing

In my view, the outsource model has grown in appeal to the small-to-mid sized accounting practices who continue to confront resourcing challenges and that need to focus their time and energy on ‘value-added’ services.  Without the specialist skills in the office, it is the ability to engage ‘experts’ but retain the relationship that offers appeal with outsourcing.  It may improve profitability, but more importantly, better manages risk.

In making the decision to outsource, one must decide whether to engage a specialist administrator in Australia or offshore?  Business process outsourcing (BPO) services are now provided for SMSFs from India, Malaysia, Vietnam and Sri-Lanka (there may be others?).

The case for investing in technology

For some SMSF administrators, the drive for success is coming through investment in technology.  The evolution of “cloud” based solutions to the SMSF sector is beginning to generate efficiencies through automated data feeds of banks, brokers, and platforms.  Add to this streamlined preparation of trust deeds and actuarial tax certificates, efficiency gains are being gained through robust systems.   Administrators are then looking to further assist clients through dashboard reporting to manage risks around contribution cap breaches and ensuring pension limits are met.  There are many further develops underway in the industry to better equip trustees and financial advisers to manage SMSFs.

So, what makes a good SMSF administrator?

This decision is one of personal choice… something that is ultimately based around the perceived value received from the SMSF administration offering.  You will see administrators competing on price, including offering free SMSF setups and first year ‘free’ offers, right through to premium service offerings that may suit those that require a more high net worth offering.

There are prerequisite skills to compete in the sector to and then those that will set businesses apart.  Tell me what you think makes a good SMSF administrator?

Join me in my open LinkedIn discussion group if you would like to follow this discussion further.


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