One on one with…Tracey Besters

Tracey Besters

SMSF Design founder Tracey Besters is helping practitioners build better SMSF businesses. She talks to Darin Tyson-Chan about the areas that need improvement among current SMSF advisory practices.

How did you come by your introduction to the SMSF sector?

It was really by chance. I started with a firm back in 2000 and it was servicing some SMSFs with pre-1999 unit trusts, so I felt I needed to learn a bit about them. I did some reading and started to look at the law, but realised I needed to do more study than that. So in 2002 I went to Coolum [in Queensland] and did a couple of weeks of intense training with Grant Abbott and spent a lot of time reading the legislation. I learnt at that point if I’m going to answer something about SMSFs, I need to understand why I’m answering it and why the query is arising.

How difficult was that?

It was not something I’d done before, but by going into the legislation and starting to understand it and think through the strategies and how to apply the principles, it wasn’t so difficult after a while. To begin with it was pretty hard, but after a while it was okay.

So how do you go about maintaining that knowledge?

I actually take a lot of information from the ATO (Australian Taxation Office) and the NTGL (National Tax Liaison Group) minutes and really try and absorb those pieces as much as I can. It’s good to get different points of view and it’s good to listen to what all of the experts and technical advisers are saying and then form my own opinion as to what the best strategy is.

What services do you offer your clients?

I’m a part of two businesses. One is Proview Financial Group, which is an adviser-to-client business. We do a lot of SMSF work in this practice and our ideal clients are really small to medium businesses. Here we look at business structuring and restructuring and the most tax-efficient way of doing things, and SMSFs are a major part of the wealth-creation and tax-minimisation piece. I’m also part of a business called SMSF Design, which is an adviser-to-adviser business. It’s come about over the past 18 months, predominantly because I’ve had people asking me constantly about the strategies I’m running and the value pricing I was using, because I had probably been charging more than other advisers had for SMSF strategies. This business is being more formalised now as it had been done on an ad hoc basis to date.

So who is the SMSF Design business targeting and what is its offering?

It’s accountants and financial advisers. We’ve held discussions with hundreds of accountants and advisers over the last 18 months across the country and there were three key things or challenges to come out of these discussions. The first one was they don’t know how to attract the right clients, so they don’t know how to market their businesses and their skills. So we help them with this. The second challenge was they don’t know how build the right strategies, meaning they don’t know how to pull together all of the different strategies that are available. For me, SMSF advice is all about strategies. Yes there’s investment advice and there’s tax compliance work and all of those other things, but the crux of it all is the strategies and they don’t know how to build them. The third challenge is pricing and that sometimes comes down to a lack of belief in the value they’re offering as an adviser as well as not being able to articulate that value to the client. So by looking at those three key challenges and helping advisers and accountants work on those areas, we’re finding a great amount of success.

Are the practitioners you’re working with already working in the SMSF space or are they new entrants and exactly how are they failing?

A bit of both and if we use accountants as an example, we’re finding if they’ve been doing SMSF work, but have been focusing more on compliance, they have got this absolute goldmine of clients sitting in front of them and they just aren’t doing anything with it. It’s not unusual to have an accounting firm servicing up to 200 SMSFs that hasn’t looked at any strategic advice for these clients because they’ve just been concentrating purely on the end of year work. So for them there is a fantastic opportunity to double or even triple their revenue just by expanding into the strategic side of things. We’re seeing a lot of that, but also a lot of people who are brand new to the industry because it’s exciting and they want to be a part of it.

In regard to marketing strategies, what do they need assistance with?

Number one would be they sometimes don’t have a marketing strategy. Accountants have been in what we call 90 per cent land, meaning regardless of how great a job or how poor a job they’ve been doing, 90 per cent of their client base will walk in the door year after year because that’s just what they do. So accountants have been in an unusual position, but a very fortunate one, to not to have to market their services so much. But with commoditisation and the lowering of the cost of compliance work associated with it and the increase in competition, they’re finding that perhaps they need to start to think about how to market their services. However, they don’t know what their message is and they don’t really have a concept of who their ideal clients are. So the first starting point is to work out who the ideal client is. In addition, they don’t know the key buy-in points for those clients because every client is different. So if you talk to a client about price, for example, because we all undervalue our services, nine times out of 10 the client will say they don’t care about the price, but the practitioner will tend to go with them on price. So it’s about getting the communication right.

So how badly is SMSF advice being priced?

Personally I think they are massively undervaluing their advice. I guess it’s like anything; if you were to put a particular strategy piece in front of 10 or 20 different advisers, you’ll get 10 or 20 different pricing points. But when we talk about the pricing we’ve been achieving, and in some cases we’re talking more than $100,000 in fees we’ve charged, if I was to ask another adviser what they’ve been charging for the same thing, they might be charging only $5000 or $10,000. So there is a fairly big gap between what can be achieved and what is being priced in the market. So it’s pretty massive.

Why are they charging so little for their services?

We’ve spent a lot of time on how to articulate that value and we would sometimes spend six to eight hours engaging a client up front, really understanding a client before we would even suggest an appropriate fee to charge. I think traditionally the market has been set in its pricing, always charging the same amount for a particular strategy. But we work on a value pricing model, so we’re looking at the outcome we’re producing for the client as opposed to the input of what we have to do and there’s a whole lot of contentious issues around that because some advisers think that’s completely ripping the client off. Some advisers charge on an hourly rate, but how do they know they’ve charged the right amount per hour. For us it’s around determining what the client wants, can we deliver on what they want, and then what value we are actually providing them.

How do you identify the new business opportunities in an accountant’s existing client base?

What we look for is common themes among clients and it’s not very often that you get a very unique client. Once you’ve seen clients a few times, you’ll find like clients and like situations, but we have developed what we call a client strategy matrix. It’s essentially a list of all the strategies we have employed and a list of all of the clients and tick off what the appropriate strategies might be. So when we look at other practitioners with SMSF clients, we apply the same procedure.

What’s the one thing you’d change in the SMSF sector?

The better education of trustees and advisers. The industry is growing so quickly it’s hard to keep up with the rate of change, even for people who are in the industry. It would be nice if we’d be able to slow down on the changes coming through and really bed them down. I would like to see the majority of SMSFs have a number of their strategies bedded down as opposed to a small proportion of them really comprehensively structured. I guess that’s one thing that would be good to change.

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