Heffron SMSF Solutions technical sales director Paul Sarkis has been involved in the sector since the turn of the century from what was supposed to be a three-year assignment. He tells Darin Tyson-Chan how institutionally-owned businesses can coexist with independents as well as his desire to see more rapid adoption of technology in the industry.
How were you introduced to the SMSF sector?
I was working at MLC in 2000 in the role of technical services manager and at the time they acquired a business in Perth that had an integrated SMSF investment, administration and compliance service. I was subsequently asked to work on that business on a three-month secondment in a technical support role for the internal product team. It ended up lasting a little over 18 months and I was heavily involved in the administration side of the business.
So has your involvement always been on the technical side of things?
I joined MLC straight out of university back in 1994. They were advertising for a graduate at the time and I didn’t really know what I wanted to do, but it was probably going to be something in finance or financial services, seeing as I studied economics and accountancy, so I thought I’d give it a go as it would be a good opportunity to get some experience. I spent a bit over 12 months in various roles learning about the business and the industry, and just over a year after I joined I was approached to apply for a job in a technical support role in a new telephone support centre MLC had set up for its aligned advisers. So that was the start of my technical career and over the following 17-plus years I held a variety of technical roles within MLC.
You just started a new role with Heffron SMSF Solutions. Is this a technical role or something different?
It’s something a little different because that’s what I was looking for when I left MLC. I wanted to take my technical knowledge and look for other ways in which I could apply it. I took on a role at Hub24 where I was head of product, which in a small business gave me fantastic exposure to every operational facet. After two-and-a-half years there I thought it was time for the next stage in my career so I took the role at Heffron, which is more about relationship management. I was quite excited by the opportunity because Heffron was going through a stage of investing in technology and scaling up the business and trying to industrialise the delivery of their services.
How helpful has your technical background been in the different roles you are now taking on?
Involvement on the technical side is a fantastic grounding for pretty much any role in financial services. Once you understand the nuts and bolts of how superannuation legislation works, along with the tax element and the regulatory framework and then the advice side and the strategies employed, you’ve got a great grounding for product development. So for my new role it’s given me great grounding as I have involvement in all facets of the business and especially product development and marketing.
When you were involved in the technical side of the industry how hard was it to keep abreast of all the changes occurring?
It’s not too difficult to keep your knowledge up to date if it’s general working knowledge. But if you want to be at the pointy end where you’re lobbying or you’re taking queries from advisers or conducting training or writing technical papers, it then becomes a full-time job. Having to trawl through the legislation and stay on top of the finer detail means you really need to commit a good deal of time to it. But seeing as I spent such a long time on the technical side, I didn’t find it too hard.
Your new role at Heffron is part of its push to be one of the few independent SMSF service providers. How important is it to have a recognised independent organisation in the space?
Independence is important in terms of providing clients with choice and providing competition in the industry and providing solutions on a fee-for-service basis that are independent of any particular product or service. We deal with trustees, financial planners and accountants and have done so for a long time and they come to the firm because of our technical excellence, but also our independence. We’re agnostic to what platform they use, what product they use and therefore people see us as the firm that will provide them with the best solutions without conflict.
While there is a lot of institutional alignment in the SMSF space now, do you think in time we’ll see the return of more independent organisations?
Yeah, I think these things go in cycles. I don’t always think it’s necessarily being independent versus being institutions; I think they can happily coexist. And I think some of the solutions we are building around technology, around some of our administration and education capability, we could leverage to work with someone who has a large retail distribution footprint. So, we don’t necessarily see it as an us versus them proposition and we’d be happy to work with them to help them deliver a better outcome for their clients. But the industry does tend to go in circles in terms of consolidation with people then going off to start independent businesses again. So I do think the pendulum will swing back the other way over time.
Are trustees though still wary about dealing with the large institutions?
Look, I think having a choice between a range of service providers is good for the industry, is good for competition. I mean some of the SMSF businesses that are institutionally owned have been driving the industry in terms of investing in the technology and that’s great for the industry because it makes the independents like us think about technological innovation. So I think competition is a good thing. There will always be clients who are comfortable with an institutional brand with its associated resources and there will be others who prefer more of an independent or boutique service provider.
There’s been a lot of negative noise about the SMSF sector recently. Are you seeing this having any adverse effects?
There’s been a lot of commentary in recent times around the SMSF sector driving the property market to the point of overheating. Our analysis tells us that’s not the case and that the number of SMSFs that are involved in limited recourse borrowing arrangements are still very small compared to the residential property investment market as a whole. So we can’t help but feel certain people are pushing their own vested interests and sometimes it’s very alarmist in regard to SMSFs. But on the whole the SMSF industry is very robust and most people are doing the right thing in terms of compliance and most trustees are working with professional advisers. So I think the space is in a pretty good position.
What would you say is the biggest change to the sector since you’ve been a part of it?
I say the simplification of super where they abolished RBLs (reasonable benefit limits) and taxes for those over 60 and simplified the tax components. I think that was a great thing, not only in the SMSF sector but superannuation industry because it has reduced the amount of complexity for trustees and for administrators, and it has aided elements like investing in technology. So that’s one change that really stands out for me. I guess the other one is the introduction of the limited recourse borrowing arrangements that has enabled people to acquire assets they otherwise wouldn’t have been able to.
If there was one change you could make to the sector, what would it be?
I’d like to drag it into the digital age at a faster rate. The administration of SMSFs is still largely paper based and still requires a lot of manual signatures and a lot of witnessing of documents and a lot of document storage. There is a fair degree of investment in technology and I would love to see the use of technology deliver a better experience to trustees, financial planners, accountants and just reduce the amount of manual processing, paperwork and data entry to really bring SMSFs into the digital age.
What’s the biggest challenge facing SMSFs in the coming 12 months?
We’re seeing a lot of activity in the bigger end of town. Every institution is looking to get a greater share of the SMSF market. At the same time, we are heavily investing in our own technology projects and there is just so much we can do in terms of technology, and investing in business is a question of priority. So for us the biggest challenge is to decide where best to deploy what are limited resources in terms of technological advancement.
