Accountants seeking to grow their SMSF related revenue should consider the life cycle of self-managed funds and break additional services into discrete projects that can be segmented and paid for separately by trustee clients, according to an SMSF technical consultant.
Chartered Accountants Australia and New Zealand (CAANZ) SMSF technical consultant Tracey Besters said accountants to date have focused on the provision of advice instead of considering new ideas that could also generate revenue.
“We tend to focus on the advice to the recording stage – looking at its implementation, how we document the workflow and the documents that are in use. This is where accountants often go in their mindset when providing advice,” Besters said at the CAANZ 2019 National SMSF Conference in Sydney today.
She added accountants should consider new ideas for the provision of advice for SMSF clients and then consider how to build out that advice offering rather than merely increasing fees for current work.
Accountants could lift revenue by 15 per cent, which was a figure identified by Investment Trends as the level at which most accountants would like to increase fees in this area, by raising the average fund fee by 15 per cent, she pointed out. This strategy would, however, be a one-off move compared to targeting SMSF clients to find other opportunities to boost revenue.
“Look at the SMSF life cycle, which has the five phases of control, protect, grow, provide and exit,” Besters said.
She said the control phase covered strategies around trust deeds, governing rules and trustee structures, which could be reviewed regularly to ensure they were up to date and suitable for the fund trustees. Additionally, the protect phase considered strategies around incapacity and estate planning, while the growth phase covered strategies for getting money into the fund, including contributions and borrowing.
Conversely, the provide phase would include strategies around moving money out of the fund via benefits and pensions, and the exit phase covered strategies around moving the member out of the fund.
“If you look at all five stages, there are about 40 strategies, plus the SMSF, that could be employed and it becomes easier if these are broken down into steps to find additional revenue of 15 per cent,” Besters said.
Referencing an Investment Trends statistic that showed 315,000 SMSFs had unmet advice needs, she noted there were significant opportunities for accountants to be able to increase revenue in servicing that group.
“The whole point of this approach is to be able to meet the unmet needs of these funds by have strategies tied to the life cycle of an SMSF, and there are plenty of clients to work for, as well as plenty to talk about with new clients that will go beyond fees and compliance work.”
She acknowledged some of the work would require accountants to provide a statement of advice (SOA) and this may be a reason for them to consider being licensed.
“If we are talking about a change in superannuation interests or pensions or contributions, I would be careful of the financial advice needs being considered,” she said.
“Any time we are talking about putting money in or out of the estate planning side of things, we need to be careful because we will need an SOA for that, but the need is there so maybe we should get licensed and follow those requirements.”
