New business generated by specialist SMSF firms is nearly three times that of generalist practices as new SMSFs prefer specialists, especially those with a larger number of funds, research released this week revealed.
The Smarter SMSF “Future of SMSF Report 2018” said while ATO statistics show the rate of annual fund establishments is at its lowest in a decade due to increased barriers in the sector, new SMSFs are heavily skewed towards specialist SMSF businesses.
The report, which is based on a survey of 488 respondents, said the analysis of this year’s survey showed firms with over 400 funds have acquired more than five times the amount of new work than the industry average. This includes establishing SMSFs and taking over funds that move from another business.
Accounting practices with a specialist SMSF division have grown nearly 50 per cent since the 2014 inaugural report, jumping from 14.3 per cent to 21.3 per cent of respondents.
The average percentage of total revenue made up of SMSF activities in a specialist firm was 44.9 per cent, while it was 25.71 per cent in a generalist practice.
In an open letter to the SMSF profession contained within the report, Smarter SMSF co-founder and chief executive Aaron Dunn said one of the key ingredients of a successful modern SMSF practice is a sharper focus on specialisation.
“It sounds obvious, but the statistics support the fact that the practices that have a focus on SMSFs tend to grow at a faster rate,” Dunn said.
“The focus is not just being technically strong in SMSF, but also through process improvement in driving efficiency and client engagement. If you’re not a specialist business, what steps can be contemplated from this report to help you on the path to success?”
The report said auditors have decreased significantly in number due to additional regulation and tax agent numbers are likely to drop off in the near future, with 6700 practitioners or half of all agents lodging SMSFs lodging 10 or fewer funds.
“With the rise of specialist providers and/or divisions within a business, I suspect the sector will look substantially different in terms of providers when looking at future ATO statistics,” Dunn said.
“Therefore, this continuing trend provides a challenge for the smaller practitioner who has historically been able to incorporate SMSFs into their practice without any great fuss.
“Competitiveness and competence are very quickly coming to the forefront and will require a rethink moving into the future.”
