SMSF administration businesses will not be made redundant as a result of the ongoing automation and technology developments in the SMSF sector.
“Automation will continue to create significant efficiencies into the future but the notion that it can and will take our role is a misreading of what is happening in the market – despite much media commentary to the contrary,” SuperGuardian and Xpress Super chief executive Olivia Long told the SMSF Association 2017 National Conference in Melbourne today.
“The fact is, technology surrounding SMSFs is still in its infancy.
“SMSF software relies on data feeds from investment providers, and data feeds drop out.
“Put bluntly, they’re unreliable. We’ve seen data feeds stop from the Big Four banks, and for service providers that offer daily online reporting it has an enormous impact.”
This means a team of accountants must manually enter the transactions to keep the data up to date during these periods, which in turn interrupts the efficiency gains that administrators are trying to obtain for audit purposes, Long explained.
“Ultimately, we still need human interaction at the back end reconciling transactions to ensure they are all captured,” she said.
Long revealed that most people weren’t aware that setting up a data feed required human interaction.
“Every time there is a new investment acquired by a fund, there is a manual process involved in establishing the data feed in the first place,” she said.
“One of the primary reasons people establish SMSFs is for the flexibility and range of investments and the service providers they can select.
“If you have a custodial platform, or an offering where trustees are required to use embedded platforms where data feeds will flow through once established, this can help minimise human interaction, but the reality is trustees want flexibility – and no platform is close to catering to the variety of investment products available to SMSFs.”
Long also highlighted that a number of financial institutions simply didn’t provide data feeds.
“Take ING as an example – a very popular cash product because of their rates, yet we’re still manually chasing information from them,” she said.
“A significant number of SMSFs hold unlisted assets in their fund – where there’s an unlisted asset, there’s a human manually processing the transaction.”
She added that property was “a long way off automation”.
“Property investments require human interaction to process the acquisition, review it from a compliance perspective, ensure ongoing compliance, and handling the bookkeeping.”
She said asset segregation was a strategy likely to become more common post 1 July, and in this event an accountant would be needed to manually set up the asset pool and reconcile the segregation to the actual member account.
“Insurance, too, remains aloof from automation,” she said.
“Insurance providers simply don’t provide data feeds so human interaction is required to review the documentation for its compliance and update SMSF software with the appropriate information.”
