The age of digital disruption was expected to prompt a dramatic decrease in the number of players involved in SMSF administration, according to an administration specialist.
“Automation is what’s pushing people into [offshoring] because they can do more with less,” Triple A Super managing director Brian Pedretti told the recent SMSF Conference convened by ARC Super, NowInfinity and WPIAS Training in Queenstown, New Zealand, earlier this month.
“The ATO is going to drive change by focusing on compliance more than ever before, so that’s going to see a tightening of compliance, and our view is that there will be far fewer providers of SMSF administration going forward because they either won’t have the scale or they won’t have the systems.
“The small accounting practices that are doing 10 or 15 or 20 funds [won’t be administering them anymore].”
Pedretti said the shift would hit the core of accountants and advisers in the SMSF space.
“If it keeps going the way it’s going where you can automate more and more, we’re going to see a lot more technology take centre stage,” he said.
“It’s coming into SMSF administration – administration is a commodity, so whenever something gets down to being based on price, it’s a commodity and a commodity is driven by price.
“But the benefits are expected: it’s a licence to play and that’s going to touch accountants and advisers.
“If you’re an accountant or adviser who’s charging $3500 for an SMSF that could be fully automated, you might get away with it for a couple of years until [trustees] find out that they can get it somewhere else, then there’s no second chance, they’ll just go.”
Furthermore, because of distribution channels and social media, trustees were finding alternative affordable, automated administrators even faster, he said.
“The other thing too is that it’s an intensely competitive market,” he said.
“Immediacy of information will be the new normal.
“Reflecting on SMSF administration, financial planners are generally more active [with the shift] offshore and accountants are a bit more squeamish about it and that depends on the age of the accountant.
“Generally speaking, the ones we see all around Australia are not keen on offshoring – not their administration – but their choice is either write it off or offshore and there are many accounting practices we’ve taken over where their write-offs were 50 per cent, so they needed an alternative.”
He said while new SMSF administration systems would lift productivity, it was highly dependent on the skills of the people using it.
“You can have the best technology in the world, but your best resources still go home at night,” he said.
“If they don’t know how to use the technology, it’s next to useless.”
