The process for SMSFs to transfer from one administrator to another is highly difficult due to two key inefficiencies, an industry executive has said.
“There are about 540,000 SMSFs in existence, so getting them to move from one administrator to the next is quite difficult and there are number of reasons for that,” Heffron SMSF Solutions managing director Martin Heffron told selfmanagedsuper.
“Because administrators charge in different ways, it could mean a customer has already paid for six months’ worth of fees as they might be charged on a monthly basis by their current administrator and they want to move, but the administrator they’re moving to charges on an annual basis so there’s that risk that they’re going to pay twice.
“That creates a bit of friction and resistance.”
In addition, there were commercial reasons data could not be transferred, Heffron said.
“There’s the challenge around moving data because who does the data belong to?” he said.
“If it’s a cloud-based solution, where most contracts work at the moment, the administrator has the contract with the software provider so the data belongs to the administrator and even though the data’s in the cloud, the administrator who owns the data might choose not to let an incoming administrator have access to it, so they might have to rekey everything.
“That creates friction and inefficiency.
“But shouldn’t data be made available to the new administrator because trustees pay for that? Otherwise they’ll be paying for it again.”
He said if administrators approached online reporting and processing from a daily perspective and charged accordingly, it would make transfers for SMSFs a lot easier.
“Also, if the data can be moved, that would also help because data ownership is a community-wide issue and that affects all of us in so many ways, but I don’t think we’ve come to grips with it yet [as an industry],” he said.
“I think these two changes would improve things.”
