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Top firms offer SMSF services: report

Macquarie’s inaugural report into accounting and financial services has revealed high-performing firms addressed and catered to the needs of SMSFs, either in-house, through referral arrangements or through outsourcing.

“The New Value Equation: 2015/16 Accounting and Financial Services Benchmarking Report”, based on a survey of 355 small to mid-tier accounting and financial services firms nationally, aimed to identify key industry trends and insights in the increasingly converging market.

It revealed when it came to high-performing firms, 96 per cent offered SMSF compliance/audit either in-house, through referral, through partnership or through outsourcing.

In addition, 89 per cent of high-performing firms offered SMSF administration.

“The survey, and our observations in the market, show that regardless of where you sit in the market, SMSF as a discipline can’t really be ignored and is a significant opportunity for all firms to consider,” Macquarie Wealth Management division director David Clatworthy told selfmanagedsuper.

“The trend to offer SMSF [services] is being driven by client demand, as well as providing a solution for clients that have more complex needs.

“We found that the high-performing firms are focused on ensuring they can deliver this for their client base.”

The report also said smaller firms were less likely to offer SMSF administration in-house compared to larger firms.

“A lot of smaller firms that we see have only 20 to 30 funds, which means that the economies of scale are not being achieved,” Clatworthy said.

“These firms are challenged as to what to do with the licensing changes because SMSFs are not a core part of their business.

“In the past, they have tended to react to SMSF requests versus proactively offering them.”

When it came to services provided in-house, SMSF administration was selected by 52 per cent of respondents, while SMSF compliance/audit was selected by 43 per cent.

Commenting on how in-house SMSF services were evolving compared to outsourcing, Clatworthy said cost pressures remained and that was the key factor influencing the decision.

“As there are no regulatory interventions to change this compression, a lot of businesses will be less inclined to audit in-house,” he explained.

“While there is compression on administration fees, technology allows businesses to do this cost effectively in-house.

“In some cases we are seeing firms who had previously outsourced bring this component back in-house.

“The use for in-house services depends on the needs of each individual business, the preferred business model, as well as client needs – we’re seeing newer firms outsource more as a way of controlling fixed costs while they grow, compared with more established firms.”

The report also said firms were looking to business models embracing a more holistic advice offering, while others were choosing to specialise in order to set themselves apart.

From 1 July, the accountants’ exemption will be removed, which will require accountants to be licensed in order to provide limited or full advice on SMSFs.

“Over a number of years we have observed a convergence in the financial planning and accounting industries in response to clients’ needs and principals’ appetite to holistically serve their clients,” Clatworthy said.

“It is driving accounting firms to make a decision as to whether they will continue to advise on SMSF and move into financial planning more broadly or alternatively remain a specialist accounting firm and form trusted referral arrangements.”

Over the next 12 months, all businesses said they would focus on attracting new, ideal clients, the report found.

While smaller firms were focused on regulatory changes and were three times more likely to feel affected by changes in this space, 41 per cent of larger firms said integrating technology was a key challenge and would look to better use it to boost efficiency, and attract and retain staff, it said.

Larger firms were defined as those with over $2 million in revenue, while smaller firms were measured as those with under $2 million in revenue.

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