Whether to provide annual or daily administration services for SMSFs comes down to several factors, including what is appropriate for the client/adviser combination.
Multiport technical services director Philip La Greca said the issue of whether to run annual or daily administration services was “horses for courses”, though it was important to look at how both options could suit each client/adviser combination.
“The key determinants are going to have an impact: the nature of assets, cash-flow sensitivity, the level of member activity and the requirements for advice at the SMSF trustee or member level,” La Greca told the SMSF Professionals’ Association of Australia National Conference in Brisbane yesterday.
“Relatively, shall we say, static movement in the assets means that certain things don’t need to be [updated] often.
“The obvious one is that if you’ve got a client that’s got a property in their fund, so how often are they going to revalue that property? We only really have to value it for the accounts; we really don’t need to revalue it along any other point in time during the year.”
Where members were not making maximum level contributions to their SMSF or drawing a pension, daily administration was probably unnecessary, he said.
The argument about whether to use daily or annual administration services revolved around the client’s expectations and who would deliver the services, he said.
“Monitoring versus reporting is the key element here,” he said.
“If we decide that we’re not going to monitor something and that we’re just going to report or that’s all the functionality that the client requires, we need to ensure that is actually clearly understood and where the limitations are, so that if someone wants something else, they don’t expect it to be part of your normal service.”
Property in an SMSF was a good example of how administration could be handled differently, depending on when information about trustee and member changes was provided and who was responsible for that information, he said.
“I’d hate to tell you how many times I get calls from advisers around clients coming in that have signed a contract to buy a property for their SMSF and want the SMSF set up for them,” he said.
“It’s a lot easier to know about it up front and try to fix it, rather than six or nine months down the track.
“So the question becomes whether that’s something they’re doing with their adviser or something they’re doing with their administrator.”
